(Address, including zip code, and telephone number, including area code, of
Registrants principal executive offices)

Eric Schmidt

Chief Executive Officer

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650) 623-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Larry W. Sonsini, Esq.

David J. Segre, Esq.

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page
Mill Road

Palo Alto, California 94304-1050

(650) 493-9300

David C. Drummond, Esq.

Jeffery L. Donovan, Esq.

Anna Itoi, Esq.

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650)
623-4000

William H. Hinman, Jr., Esq.

Simpson Thacher & Bartlett LLP

3330 Hillview Avenue

Palo Alto, California 94304

(650)
251-5000

Approximate date of commencement of
proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, as amended (the Securities Act), check the following box. ¨

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same
offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of

Securities to be Registered

Proposed MaximumAggregate OfferingPrice (1)(2)

Amount of

Registration Fee (3)

Class A common stock, par value $0.001 per share

$

2,718,281,828

$

344,406.31

(1)

Estimated solely for the purpose of computing the amount of the registration fee, in accordance with to Rule 457(o) promulgated under the Securities Act of 1933.

(2)

Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.

(3)

Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.

Prospectus (Subject to
Completion)

Dated June 21, 2004

Shares

Class A Common Stock

Google Inc. is offering shares of Class A common
stock and the selling stockholders are offering shares of Class A common stock. We will not receive any proceeds from the
sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between
$ and $ per share.

Following this offering, we will have two classes of authorized common
stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one
vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

We expect to apply to list our Class A
common stock on either the New York Stock Exchange or the Nasdaq National Market under the symbol  .

Google has granted the underwriters the right to purchase up to an additional
shares to cover over-allotments.

The price to the public and allocation of shares will be determined by an auction process. The minimum size for a bid in the auction will be five shares of our Class A
common stock. The method for submitting bids and a more detailed description of this auction process are included in Auction Process beginning on page 33. As part of this auction process, we are attempting to assess the market
demand for our Class A common stock and to set the size and price to the public of this offering to meet that demand. As a result, buyers should not expect to be able to sell their shares for a profit shortly after our Class A common stock
begins trading. We will determine the method for allocating shares to bidders who submitted successful bids following the closing of the auction.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.

It is
expected that the shares will be delivered to purchasers on or about , 2004.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with
information that is different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our Class A common stock only in jurisdictions where offers and sales are permitted. The information in this
prospectus is complete and accurate only as of the date of the front cover regardless of the time of delivery of this prospectus or of any sale of shares. Except where the context requires otherwise, in this prospectus, the Company,
Google, we, us and our refer to Google Inc., a Delaware corporation, and, where appropriate, its subsidiaries.

We have not undertaken any efforts to qualify this offering for offers to individual investors in any jurisdiction outside the U.S.; therefore,
individual investors located outside the U.S. should not expect to be eligible to participate in this offering.

Until , 2004, 25 days after the
date of this offering, all dealers that effect transactions in our shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or subscriptions.

This
summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information,
including our financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in Risk Factors.

Google Inc.

Google is a global technology leader focused on improving the ways people
connect with information. Our innovations in web search and advertising have made our web site a top Internet destination and our brand one of the most recognized in the world. We maintain the worlds largest online index of web sites and other
content, and we make this information freely available to anyone with an Internet connection. Our automated search technology helps people obtain nearly instant access to relevant information from our vast online index.

We generate revenue by delivering relevant, cost-effective online
advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party web sites that comprise our Google Network use our Google AdSense program to deliver relevant
ads that generate revenue and enhance the user experience. Advertisers in our AdWords program pay us a fee each time a user clicks on one of their ads displayed either on our web sites or on the web sites of Google Network members that participate
in our AdSense program. When a user clicks on an ad displayed on a web site of a Google Network member, we retain only a small portion of the advertiser fee, while most of the fee is paid to the Google Network member.

Our mission is to organize the worlds information and make it
universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to
increased traffic and strong word-of-mouth promotion. Our dedication to putting users first is reflected in three key commitments we have made to our users:



We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept
payment for inclusion or ranking in them.



We will do our best to provide the most relevant and useful advertising. Whenever someone pays for something, we will make it clear to our users. Advertisements should not be an
annoying interruption.



We will never stop working to improve our user experience, our search technology and other important areas of information organization.

We believe that our user focus is the foundation of our success to date. We
also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.

Corporate Information

We were incorporated in California in September 1998. In August 2003, we reincorporated in Delaware. Our principal executive offices are located at 1600
Amphitheatre Parkway, Mountain View, California 94043, and our telephone number is (650) 623-4000. We maintain a number of web sites including www.google.com. The information on our web sites is not part of this prospectus.

Google® is a registered trademark in the U.S. and several other countries. Our unregistered
trademarks include: AdSense, AdWords, Blogger, Froogle, Gmail, Im Feeling Lucky and PageRank. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective holders.

We intend to use the net proceeds from this offering for general corporate purposes, including working capital, and possible acquisitions of complementary businesses, technologies or other
assets. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See Use of Proceeds for additional information.

Proposed symbol

The number of
shares of Class A and Class B common stock that will be outstanding after this offering is based on the number of shares outstanding at May 31, 2004 and excludes:



1,996,140 shares of Class B common stock issuable upon the exercise of warrants outstanding at May 31, 2004, at a weighted average exercise price of $0.62 per share.



6,167,311 shares of Class A common stock issuable upon the exercise of options outstanding at May 31, 2004, at a weighted average exercise price of $7.97 per share.



10,590,500 shares of Class B common stock issuable upon the exercise of options outstanding at May 31, 2004, at a weighted average exercise price of $2.65 per share.



4,044,682 shares of common stock available for future issuance under our stock option plans at May 31, 2004.

Unless otherwise indicated, all information in this prospectus assumes that
the underwriters do not exercise the over-allotment option to purchase additional shares of Class A common stock in this offering and that all shares of our Class A Senior common stock and preferred
stock are converted into Class B common stock and all shares of our common stock are converted into Class A common stock prior to this offering.

The Auction Process

The auction process being used for our initial public offering differs from methods that have been traditionally used in most other underwritten initial
public offerings in the U.S. In particular, the initial public offering price and the allocation of shares will be determined by an auction process conducted by us and our underwriters. For more information about the auction process, see
Auction Process.

The following table summarizes financial data regarding our business and should be read together with
Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus.

Year Ended December 31,

Three Months EndedMarch 31,

1999

2000

2001

2002

2003

2003

2004

(in thousands, except per share data)

(unaudited)

Consolidated Statements of Operations Data:

Net revenues

$

220

$

19,108

$

86,426

$

347,848

$

961,874

$

178,894

$

389,638

Costs and expenses:

Cost of revenues

908

6,081

14,228

39,850

121,794

17,471

53,413

Research and development

2,930

10,516

16,500

31,748

91,228

12,505

35,019

Sales and marketing

1,677

10,385

20,076

43,849

120,328

17,767

47,904

General and administrative

1,221

4,357

12,275

24,300

56,699

10,027

21,506

Stock-based compensation



2,506

12,383

21,635

229,361

36,418

76,473

Total costs and expenses

6,736

33,845

75,462

161,382

619,410

94,188

234,315

Income (loss) from operations

(6,516

)

(14,737

)

10,964

186,466

342,464

84,706

155,323

Interest income (expense) and other, net

440

47

(896

)

(1,551

)

4,190

(47

)

300

Income (loss) before income taxes

(6,076

)

(14,690

)

10,068

184,915

346,654

84,659

155,623

Provision for income taxes





3,083

85,259

241,006

58,859

91,650

Net income (loss)

$

(6,076

)

$

(14,690

)

$

6,985

$

99,656

$

105,648

$

25,800

$

63,973

Net income (loss) per share:

Basic

$

(0.14

)

$

(0.22

)

$

0.07

$

0.86

$

0.77

$

0.20

$

0.42

Diluted

$

(0.14

)

$

(0.22

)

$

0.04

$

0.45

$

0.41

$

0.10

$

0.24

Number of shares used in per share calculations:

Basic

42,445

67,032

94,523

115,242

137,697

127,339

151,084

Diluted

42,445

67,032

186,776

220,633

256,638

248,687

264,183

The following
table presents a summary of our balance sheet data at March 31, 2004:



On an actual basis.



On a pro forma as adjusted basis to give effect to the conversion of all outstanding shares of our Class A Senior common stock and preferred stock into shares of Class B common
stock and all outstanding shares of our common stock into shares of Class A common stock prior to the closing of this offering and to further give effect to the sale by us of shares of our Class A common stock at an assumed initial public
offering price of $ per share, and the receipt of the net proceeds from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, as
set forth under Use of Proceeds and Cash and Capitalization.

An investment in
Google involves significant risks. You should read these risk factors carefully before deciding whether to invest in our company. The following is a description of what we consider our key challenges and risks.

Risks Related to Our Business and Industry

We face significant competition from Microsoft and Yahoo.

We face formidable competition in every aspect of our
business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo. Microsoft has announced
plans to develop a new web search technology that may make web search a more integrated part of the Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Yahoo has become
an increasingly significant competitor, having acquired Overture Services, which offers Internet advertising solutions that compete with our AdWords and AdSense programs, as well as the Inktomi, AltaVista and AllTheWeb search engines. Since June
2000, Yahoo has used, to varying degrees, our web search technology on its web site to provide web search services to its users. We have notified Yahoo of our election to terminate our agreement, effective July 2004. This agreement with Yahoo
accounted for less than 3% of our net revenues for the year ended December 31, 2003 and less than 3% for the three months ended March 31, 2004.

Both Microsoft and Yahoo have more employees than we do (in Microsofts case, currently more than 20 times as many). Microsoft also has
significantly more cash resources than we do. Both of these companies also have longer operating histories and more established relationships with customers. They can use their experience and resources against us in a variety of competitive ways,
including by making acquisitions, investing more aggressively in research and development and competing more aggressively for advertisers and web sites. Microsoft and Yahoo also may have a greater ability to attract and retain users than we do
because they operate Internet portals with a broad range of products and services. If Microsoft or Yahoo are successful in providing similar or better web search results compared to ours or leverage their platforms to make their web search services
easier to access than ours, we could experience a significant decline in user traffic. Any such decline in traffic could negatively affect our net revenues.

We face competition from other Internet companies, including web search providers, Internet advertising companies and destination web sites that may
also bundle their services with Internet access.

In
addition to Microsoft and Yahoo, we face competition from other web search providers, including companies that are not yet known to us. We compete with Internet advertising companies, particularly in the areas of pay-for-performance and
keyword-targeted Internet advertising. Also, we may compete with companies that sell products and services online because these companies, like us, are trying to attract users to their web sites to search for information about products and services.

We also compete with destination web sites that seek to
increase their search-related traffic. These destination web sites may include those operated by Internet access providers, such as cable and DSL service providers. Because our users need to access our services through Internet access providers,
they have direct relationships with these providers. If an access provider or a computer or computing device manufacturer offers online services that compete with ours, the user may find it more convenient to use the services of the access provider
or manufacturer. In addition, the access provider or manufacturer may make it hard to access our services by not listing them in the access providers or manufacturers own menu of offerings. Also, because the access provider gathers
information from the user in connection with the establishment of a billing relationship, the access provider may be more effective than we are in tailoring services and advertisements to the specific tastes of the user.

There has been a trend toward industry consolidation among our competitors, and so smaller competitors
today may become larger competitors in the future. If our competitors are more successful than we are at generating traffic, our revenues may decline.

We face competition from traditional media companies, and we may not be included in the advertising budgets of large advertisers, which could harm
our operating results.

In addition to Internet
companies, we face competition from companies that offer traditional media advertising opportunities. Most large advertisers have set advertising budgets, a very small portion of which is allocated to Internet advertising. We expect that large
advertisers will continue to focus most of their advertising efforts on traditional media. If we fail to convince these companies to spend a portion of their advertising budgets with us, or if our existing advertisers reduce the amount they spend on
our programs, our operating results would be harmed.

We
expect our growth rates to decline and anticipate downward pressure on our operating margin in the future.

We expect that in the future our revenue growth rate will decline and anticipate that there will be downward pressure on our operating margin. We believe
our revenue growth rate will decline as a result of anticipated changes to our advertising program revenue mix, increasing competition and the inevitable decline in growth rates as our net revenues increase to higher levels. We believe our operating
margin will decline as a result of increasing competition and increased expenditures for all aspects of our business as a percentage of our net revenues, including product development and sales and marketing expenses. We also expect that our
operating margin may decline as a result of increases in the proportion of our net revenues generated from our Google Network members. The margin on revenue we generate from our Google Network members is generally significantly less than the margin
on revenue we generate from advertising on our web sites. Additionally, the margin we earn on revenue generated from our Google Network could decrease in the future if our Google Network members require a greater portion of the advertising fees.

Our operating results may fluctuate, which makes our
results difficult to predict and could cause our results to fall short of expectations.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our
operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly and annual expenses as a percentage of our net revenues may be significantly
different from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause our stock price to fall. Each of the risk factors listed in this Risk Factors
section, and the following factors, may affect our operating results:



Our ability to continue to attract users to our web sites.



Our ability to attract advertisers to our AdWords program.



Our ability to attract web sites to our AdSense program.



The mix in our net revenues between those generated on our web sites and those generated through our Google Network.



The amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our businesses, operations and infrastructure.

General economic conditions and those economic conditions specific to the Internet and Internet advertising.



Our ability to keep our web sites operational at a reasonable cost and without service interruptions.



Our ability to forecast revenue from agreements under which we guarantee minimum payments.



Geopolitical events such as war, threat of war or terrorist actions.

Because our business is changing and evolving, our historical operating results may not be useful to you in predicting our future operating results. In
addition, advertising spending has historically been cyclical in nature, reflecting overall economic conditions as well as budgeting and buying patterns. For example, in 1999, advertisers spent heavily on Internet advertising. This was followed by a
lengthy downturn in ad spending on the web. Also, user traffic tends to be seasonal. Our rapid growth has masked the cyclicality and seasonality of our business. As our growth slows, we expect that the cyclicality and seasonality in our business may
become more pronounced and may in the future cause our operating results to fluctuate.

If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenues and
operating results could suffer.

Our success depends
on providing products and services that people use for a high quality Internet experience. Our competitors are constantly developing innovations in web search, online advertising and providing information to people. As a result, we must continue to
invest significant resources in research and development in order to enhance our web search technology and our existing products and services and introduce new high-quality products and services that people will use. If we are unable to predict user
preferences or industry changes, or if we are unable to modify our products and services on a timely basis, we may lose users, advertisers and Google Network members. Our operating results would also suffer if our innovations are not responsive to
the needs of our users, advertisers and Google Network members, are not appropriately timed with market opportunity or are not effectively brought to market. As search technology continues to develop, our competitors may be able to offer search
results that are, or that are perceived to be, substantially similar or better than those generated by our search services. This may force us to compete on bases in addition to quality of search results and to expend significant resources in order
to remain competitive.

We generate our revenue almost
entirely from advertising, and the reduction in spending by or loss of advertisers could seriously harm our business.

We generated approximately 95% of our net revenues in 2003 from our advertisers. Our advertisers can generally terminate their contracts with us at any
time. Advertisers will not continue to do business with us if their investment in advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their advertisements in an appropriate and effective manner. If we
are unable to remain competitive and provide value to our advertisers, they may stop placing ads with us, which would negatively affect our net revenues and business.

We rely on our Google Network members for a significant portion of our net revenues, and otherwise benefit from
our association with them. The loss of these members could prevent us from receiving the benefits we receive from our association with these Google Network members, which could adversely affect our business.

We provide advertising, web search and other services to members of our
Google Network. The net revenues generated from the fees advertisers pay us when users click on ads that we have delivered to our Google Network members web sites represented approximately 15% of our net revenues in 2003, and approximately 21%
of our net revenues for the three months ended March 31, 2004, and we expect this percentage to increase in the future. We consider this network to be critical to the future growth of our net revenues. However, some of the participants in this
network may compete with us in one or more areas. Therefore, they may decide in the future to terminate their agreements with us. If our Google Network members decide to use a competitors or their own web search or advertising services, our
net revenues would decline.

Our agreements with a few of the largest Google Network members account for a significant portion of net
revenues derived from our AdSense program. In addition, certain of our key network members operate high-profile web sites, and we derive tangible and intangible benefits from this affiliation. If one or more of these key relationships is terminated
or not renewed, and is not replaced with a comparable relationship, our business would be adversely affected.

Our business and operations are experiencing rapid growth. If we fail to effectively manage our growth, our business and operating results could be
harmed and we may have to incur significant expenditures to address the additional operational and control requirements of this growth.

We have experienced, and continue to experience, rapid growth in our headcount and operations, which has placed, and will continue to place, significant
demands on our management, operational and financial infrastructure. If we do not effectively manage our growth, the quality of our products and services could suffer, which could negatively affect our brand and operating results. To effectively
manage this growth, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. These systems enhancements and improvements will require significant capital expenditures and
allocation of valuable management resources. If the improvements are not implemented successfully, our ability to manage our growth will be impaired and we may have to make significant additional expenditures to address these issues, which could
harm our financial position. The required improvements include:



Enhancing our information and communication systems to ensure that our offices around the world are well coordinated and that we can effectively communicate with our growing base of
users, advertisers and Google Network members.



Enhancing systems of internal controls to ensure timely and accurate reporting of all of our operations.



Documenting all of our information technology systems and our business processes for our ad systems and our billing systems.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial
results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal controls are necessary for us to provide reliable
financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our brand and operating results could be harmed. We have in the past discovered, and may in the future discover, areas of our internal
controls that need improvement. For example, during our 2002 audit, our external auditors brought to our attention a need to increase restrictions on employee access to our advertising system and automate more of our financial processes. The
auditors identified these issues together as a reportable condition, which means that these were matters that in the auditors judgment could adversely affect our ability to record, process, summarize and report financial data
consistent with the assertions of management in the financial statements. In 2003, we devoted significant resources to remediate and improve our internal controls. Although we believe that these efforts have strengthened our internal controls and
addressed the concerns that gave rise to the reportable condition in 2002, we are continuing to work to improve our internal controls, including in the areas of access and security. We cannot be certain that these measures will ensure
that we implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We intend to migrate critical financial functions to a third-party provider. If this potential
transition is not successful, our business and operations could be disrupted and our operating results would be harmed.

We intend to transfer our worldwide billing, collection and credit evaluation functions to a third-party service provider. We are currently engaged in
discussions with a third-party service provider but we have not yet signed an agreement with this service provider and cannot be sure that the arrangement will be completed and implemented. The third-party provider would also track, on an automated
basis, a majority of our growing number of AdSense revenue share agreements. These functions are critical to our operations and involve sensitive interactions between us and our advertisers and members of our Google Network. If we do not
successfully implement this project, our business, reputation and operating results could be harmed. We have no experience managing and implementing this type of large-scale, cross-functional, international infrastructure project. We also may not be
able to integrate our systems and processes with those of the third-party service provider on a timely basis, or at all. Even if this integration is completed on time, the service provider may not perform to agreed upon service levels. Failure of
the service provider to perform satisfactorily could result in customer dissatisfaction, disrupt our operations and adversely affect operating results. If we implement this migration to a third-party service provider, we will have significantly less
control over the systems and processes than if we maintained and operated them ourselves, which increases our risk. If we need to find an alternative source for performing these functions, we may have to expend significant resources in doing so, and
we cannot guarantee this would be accomplished in a timely manner or without significant additional disruption to our business.

Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of users,
advertisers and Google Network members will be impaired and our business and operating results will be harmed.

We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining
and enhancing the Google brand is critical to expanding our base of users, advertisers and Google Network members. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be
successful. If we fail to promote and maintain the Google brand, or if we incur excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected. We anticipate that, as
our market becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Maintaining and enhancing our brand will depend largely on our ability to be a technology leader and to continue to
provide high quality products and services, which we may not do successfully. To date, we have engaged in relatively little direct brand promotion activities. This enhances the risk that we may not successfully implement brand enhancement efforts in
the future.

People have in the past expressed, and may in the
future express, objections to aspects of our products. For example, people have raised privacy concerns relating to the ability of our recently announced Gmail email service to match relevant ads to the content of email messages. Some people have
also reacted negatively to the fact that our search technology can be used to help people find hateful or derogatory information on the web. Aspects of our future products may raise similar public concerns. Publicity regarding such concerns could
harm our brand. In addition, members of the Google Network and other third parties may take actions that could impair the value of our brand. We are aware that third parties, from time to time, use Google and similar variations in their
domain names without our approval, and our brand may be harmed if users and advertisers associate these domains with us.

Proprietary document formats may limit the effectiveness of our search technology by preventing our technology from accessing the content of
documents in such formats which could limit the effectiveness of our products and services.

An increasing amount of information on the Internet is provided in proprietary document formats such as Microsoft Word. The providers of the software
application used to create these documents could engineer the document format to prevent or interfere with our ability to access the document contents with our search

technology. This would mean that the document contents would not be included in our search results even if the contents were directly relevant to a search.
These types of activities could assist our competitors or diminish the value of our search results. The software providers may also seek to require us to pay them royalties in exchange for giving us the ability to search documents in their format.
If the software provider also competes with us in the search business, they may give their search technology a preferential ability to search documents in their proprietary format. Any of these results could harm our brand and our operating results.

New technologies could block our ads, which would harm
our business.

Technologies may be developed that can
block the display of our ads. Most of our net revenues are derived from fees paid to us by advertisers in connection with the display of ads on web pages. As a result, ad-blocking technology could, in the future, adversely affect our operating
results.

Our corporate culture has contributed to
our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture, and our business may be harmed.

We believe that a critical contributor to our success has been our corporate
culture, which we believe fosters innovation, creativity and teamwork. As our organization grows, and we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the beneficial
aspects of our corporate culture. This could negatively impact our future success. In addition, this offering may create disparities in wealth among Google employees, which may adversely impact relations among employees and our corporate culture in
general.

Our intellectual property rights are valuable,
and any inability to protect them could reduce the value of our products, services and brand.

Our patents, trademarks, trade secrets, copyrights and all of our other intellectual property rights are important assets for us. There are events that
are outside of our control that pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in every country in which our products and services are distributed or made available
through the Internet. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Also,
protecting our intellectual property rights is costly and time consuming. Any increase in the unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results.

We seek to obtain patent protection for our innovations. It is possible,
however, that some of these innovations may not be protectable. In addition, given the costs of obtaining patent protection, we may choose not to protect certain innovations that later turn out to be important. Furthermore, there is always the
possibility, despite our efforts, that the scope of the protection gained will be insufficient or that an issued patent may be deemed invalid or unenforceable.

We also face risks associated with our trademarks. For example, there is a risk that the word Google could become so commonly used that it
becomes synonymous with the word search. If this happens, we could lose protection for this trademark, which could result in other people using the word Google to refer to their own products, thus diminishing our brand.

We also seek to maintain certain intellectual property as
trade secrets. The secrecy could be compromised by third parties, or intentionally or accidentally by our employees, which would cause us to lose the competitive advantage resulting from these trade secrets.

We are, and may in the future be, subject to intellectual property rights claims, which are costly
to defend, could require us to pay damages and could limit our ability to use certain technologies in the future.

Companies in the Internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter
into litigation based on allegations of infringement or other violations of intellectual property rights. As we face increasing competition, the possibility of intellectual property rights claims against us grows. Our technologies may not be able to
withstand any third-party claims or rights against their use. Any intellectual property claims, with or without merit, could be time-consuming, expensive to litigate or settle and could divert management resources and attention. In addition, many of
our agreements with members of our Google Network require us to indemnify these members for third-party intellectual property infringement claims, which would increase our costs as a result of defending such claims and may require that we pay
damages if there were an adverse ruling in any such claims. An adverse determination also could prevent us from offering our products and services to others and may require that we procure substitute products or services for these members.

With respect to any intellectual property rights claim, we may
have to pay damages or stop using technology found to be in violation of a third partys rights. We may have to seek a license for the technology, which may not be available on reasonable terms and may significantly increase our operating
expenses. The technology also may not be available for license to us at all. As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense. If we cannot license or develop
technology for the infringing aspects of our business, we may be forced to limit our product and service offerings and may be unable to compete effectively. Any of these results could harm our brand and operating results.

From time to time, we receive notice letters from patent holders alleging
that certain of our products and services infringe their patent rights. Some of these have resulted in litigation against us. For example, Overture Services (now owned by Yahoo) has sued us, claiming that the Google AdWords program infringes certain
claims of an Overture Services patent. It also claims that the patent relates to Overture Services own bid-for-ad placement business model and its pay-for-performance technologies. We are currently litigating this case. If Overture Services
wins, it may significantly limit our ability to use the AdWords program, and we also may be required to pay damages.

Companies have also filed trademark infringement and related claims against us over the display of ads in response to user queries that include trademark
terms. The outcomes of these lawsuits have differed from jurisdiction to jurisdiction. A court in France has held us liable for allowing advertisers to select certain trademarked terms as keywords. We have appealed this decision. We were also sued
in Germany on a similar matter where a court held that we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating similar issues in other cases in the U.S., France and Germany.

In order to provide users with more useful ads, we have recently revised our
trademark policy in the U.S. and Canada. Under our new policy, we no longer disable ads due to selection by our advertisers of trademarks as keyword triggers for the ads. As a result of this change in policy, we may be subject to more trademark
infringement lawsuits. Defending these lawsuits could take time and resources. Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could harm our business.

We have also been notified by third parties that they
believe features of certain of our products, including Google WebSearch, Google News and Google Image Search, violate their copyrights. Generally speaking, any time that we have a product or service that links to or hosts material in which others
allege to own copyrights, we face the risk of being sued for copyright infringement or related claims. Because these products and services comprise the majority of our products and services, the risk of potential harm from such lawsuits is
substantial.

Expansion into international markets is important to our long-term success, and our inexperience in
the operation of our business outside the U.S. increases the risk that our international expansion efforts will not be successful.

We opened our first office outside the U.S. in 2001 and have only limited experience with operations outside the U.S. Expansion into international markets
requires management attention and resources. In addition, we face the following additional risks associated with our expansion outside the U.S.:



Challenges caused by distance, language and cultural differences.



Longer payment cycles in some countries.



Credit risk and higher levels of payment fraud.



Legal and regulatory restrictions.



Currency exchange rate fluctuations.



Foreign exchange controls that might prevent us from repatriating cash earned in countries outside the U.S.



Political and economic instability and export restrictions.



Potentially adverse tax consequences.



Higher costs associated with doing business internationally.

These risks could harm our international expansion efforts, which would in turn harm our business and operating results.

We compete internationally with local information providers and
with U.S. competitors who are currently more successful than we are in various markets, and if we fail to compete effectively in international markets, our business will be harmed.

We face different market characteristics and competition outside the U.S. In
certain markets, other web search, advertising services and Internet companies have greater brand recognition, more users and more search traffic than we have. Even in countries where we have a significant user following, we may not be as successful
in generating advertising revenue due to slower market development, our inability to provide attractive local advertising services or other factors. In order to compete, we need to improve our brand recognition and our selling efforts
internationally and build stronger relationships with advertisers. We also need to better understand our international users and their preferences. If we fail to do so, our global expansion efforts may be more costly and less profitable than we
expect.

Our business may be adversely affected by
malicious third-party applications that interfere with our receipt of information from, and provision of information to, our users, which may impair our users experience with our products and services.

Our business may be adversely affected by malicious applications that make
changes to our users computers and interfere with the Google experience. These applications have in the past attempted, and may in the future attempt, to change our users Internet experience, including hijacking queries to Google.com,
altering or replacing Google search results, or otherwise interfering with our ability to connect with our users. The interference often occurs without disclosure to or consent from users, resulting in a negative experience that users may associate
with Google. These applications may be difficult or impossible to uninstall or disable, may reinstall themselves and may circumvent other applications efforts to block or remove them. The ability to reach users and provide them with a superior
experience is critical to our success. If our efforts to combat these malicious applications are unsuccessful, our reputation may be harmed, and our communications with certain users could be impaired. This could result in a decline in user traffic
and associated ad revenues, which would damage our business.

If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby
causing our business to suffer.

We are exposed to
the risk of fraudulent clicks on our ads by persons seeking to increase the advertising fees paid to our Google Network members. We have regularly refunded revenue that our advertisers have paid to us and that was later attributed to click-through
fraud, and we expect to do so in the future. Click-through fraud occurs when a person clicks on a Google AdWords ad displayed on a web site in order to generate the revenue share payment to the Google Network member rather than to view the
underlying content. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks we may have to issue refunds retroactively of amounts previously paid to our Google Network members.
This would negatively affect our profitability, and these types of fraudulent activities could hurt our brand. If fraudulent clicks are not detected, the affected advertisers may experience a reduced return on their investment in our advertising
programs because the fraudulent clicks will not lead to potential revenue for the advertisers. This could lead the advertisers to become dissatisfied with our advertising programs, which could lead to loss of advertisers and revenue.

Index spammers could harm the integrity of our web search
results, which could damage our reputation and cause our users to be dissatisfied with our products and services.

There is an ongoing and increasing effort by index spammers to develop ways to manipulate our web search results. For example, because our web
search technology ranks a web pages relevance based in part on the importance of the web sites that link to it, people have attempted to link a group of web sites together to manipulate web search results. We take this problem very seriously
because providing relevant information to users is critical to our success. If our efforts to combat these and other types of index spamming are unsuccessful, our reputation for delivering relevant information could be diminished. This could result
in a decline in user traffic, which would damage our business.

Privacy concerns relating to elements of our technology could damage our reputation and deter current and potential users from using our products and services.

From time to time, concerns may be expressed about whether our products
and services compromise the privacy of users and others. Concerns about our collection, use or sharing of personal information or other privacy-related matters, even if unfounded, could damage our reputation and operating results. Recently, several
groups have raised privacy concerns in connection with our Gmail free email service which we announced in April 2004 and these concerns have attracted a significant amount of public commentary and attention. The concerns relate principally to the
fact that Gmail automatically processes the content of the users email messages in order to display targeted advertising when such messages are viewed using the Gmail service. Privacy concerns have also arisen with our products that provide
improved access to personal information that is already publicly available, but that we have made more readily accessible by the public.

Our business is subject to a variety of U.S. and foreign laws, which could subject us to claims or other remedies based on the nature and content of
the information searched or displayed by our products and services, and could limit our ability to provide information regarding regulated industries and products.

The laws relating to the liability of providers of online services for activities of their users are currently unsettled
both within the U.S. and abroad. Claims have been threatened and filed under both U.S. and foreign law for defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, copyright or trademark infringement, or
other theories based on the nature and content of the materials searched and the ads posted or the content generated by our users. From time to time we have received notices from individuals who do not want their names or web sites to appear in our
web search results when certain keywords are searched. It is also possible that we could be held liable for misinformation provided over the web when that information appears in our web search results. If one of these complaints results in liability
to us, it could be potentially costly, encourage similar lawsuits, distract management and harm our reputation and possibly our business. In

addition, increased attention focused on these issues and legislative proposals could harm our reputation or otherwise affect the growth of our business.

The application to us of existing laws regulating or requiring
licenses for certain businesses of our advertisers, including, for example, distribution of pharmaceuticals, adult content, financial services, alcohol or firearms, can be unclear. Existing or new legislation could expose us to substantial
liability, restrict our ability to deliver services to our users, limit our ability to grow and cause us to incur significant expenses in order to comply with such laws and regulations.

Several other federal laws could have an impact on our business. Compliance with these laws and regulations is complex and
may impose significant additional costs on us. For example, the Digital Millennium Copyright Act has provisions that limit, but do not eliminate, our liability for listing or linking to third-party web sites that include materials that infringe
copyrights or other rights, so long as we comply with the statutory requirements of this act. The Childrens Online Protection Act and the Childrens Online Privacy Protection Act restrict the distribution of materials considered harmful
to children and impose additional restrictions on the ability of online services to collect information from minors. In addition, the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of
violations of federal child pornography laws under certain circumstances. Any failure on our part to comply with these regulations may subject us to additional liabilities.

We also face risks associated with international data protection. The interpretation and application of data protection laws
in Europe and elsewhere are still uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. If so, in addition to the possibility of fines, this could result in an
order requiring that we change our data practices, which in turn could have a material effect on our business.

We also face risks from legislation that could be passed in the future. For example, at least two states have introduced legislation that could interfere
with or prohibit our Gmail free advertising-supported email service that was recently announced as a test service. The legislation, as originally proposed in California and Massachusetts, would make it more difficult for us to operate or would
prohibit, the aspects of the service that process the contents of users email messages for the purpose of identifying and displaying ads relevant to that content. While the proposed legislation has been modified in one of the states so that it
does not inhibit the operation of the Gmail service, the legislation has not been finally adopted. If this legislation is adopted as originally proposed, or other similar legislation is adopted, it could prevent us from implementing the Gmail
service in the affected states. This could impair our ability to compete in the email services market.

If we were to lose the services of Eric, Larry, Sergey or our senior management team, we may not be able to execute our business strategy.

Our future success depends in a large part upon the
continued service of key members of our senior management team. In particular, our CEO Eric Schmidt and our founders Larry Page and Sergey Brin are critical to the overall management of Google as well as the development of our technology, our
culture and our strategic direction. All of our executive officers and key employees are at-will employees, and we do not maintain any key-person life insurance policies. The loss of any of our management or key personnel could seriously harm our
business.

The initial option grants to many of our
senior management and key employees are fully vested. Therefore, these employees may not have sufficient financial incentive to stay with us, we may have to incur costs to replace key employees that leave, and our ability to execute our business
model could be impaired if we cannot replace departing employees in a timely manner.

Many of our senior management personnel and other key employees have become, or will soon become, substantially vested in their initial stock option
grants. While we often grant additional stock options to

management personnel and other key employees after their hire dates to provide additional incentives to remain employed by us, their initial grants are
usually much larger than follow-on grants. Employees may be more likely to leave us after their initial option grant fully vests, especially if the shares underlying the options have significantly appreciated in value relative to the option exercise
price. We have not given any additional grants to Eric, Larry or Sergey. Larry and Sergey are fully vested, and only a small portion of Erics stock is subject to future vesting. If any members of our senior management team leave the company,
our ability to successfully operate our business could be impaired. We also may have to incur significant costs in identifying, hiring, training and retaining replacements for departing employees.

We rely on highly skilled personnel and, if we are unable to retain
or motivate key personnel or hire qualified personnel, we may not be able to grow effectively.

Our performance is largely dependent on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to
identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Competition in our industry for qualified employees is intense, and we are aware that certain of our competitors have directly targeted our
employees. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.

We have in the past maintained a rigorous, highly selective and time-consuming hiring process. We believe that our approach to hiring has significantly
contributed to our success to date. As we grow, our hiring process may prevent us from hiring the personnel we need in a timely manner. In addition, as we become a more mature company, we may find our recruiting efforts more challenging. The
incentives to attract, retain and motivate employees provided by our option grants or by future arrangements, such as through cash bonuses, may not be as effective as in the past. If we do not succeed in attracting excellent personnel or retaining
or motivating existing personnel, we may be unable to grow effectively.

Our CEO and our two founders run the business and affairs of the company collectively, which may harm their ability to manage effectively.

Eric, our CEO, and Larry and Sergey, our founders and presidents, currently provide leadership to the company as a team. Our
bylaws provide that our CEO and our presidents will together have general supervision, direction and control of the company, subject to the control of our board of directors. As a result, Eric, Larry and Sergey tend to operate the company
collectively and to consult extensively with each other before significant decisions are made. This may slow the decision-making process, and a disagreement among these individuals could prevent key strategic decisions from being made in a timely
manner. In the event our CEO and our two founders are unable to continue to work well together in providing cohesive leadership, our business could be harmed.

We have a short operating history and a relatively new business model in an emerging and rapidly evolving market. This makes it difficult to
evaluate our future prospects, may increase the risk that we will not continue to be successful and increases the risk of your investment.

We first derived revenue from our online search business in 1999 and from our advertising services in 2000, and we have only a short operating history
with our cost-per-click advertising model, which we launched in 2002. As a result, we have very little operating history for you to evaluate in assessing our future prospects. Also, we derive nearly all of our net revenues from online advertising,
which is an immature industry that has undergone rapid and dramatic changes in its short history. You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company in a new and rapidly
evolving market. We may not be able to successfully address these risks and difficulties, which could materially harm our business and operating results.

We may have difficulty scaling and adapting our existing architecture to accommodate increased
traffic and technology advances or changing business requirements, which could lead to the loss of users, advertisers and Google Network members, and cause us to incur expenses to make architectural changes.

To be successful, our network infrastructure has to perform well and be
reliable. The greater the user traffic and the greater the complexity of our products and services, the more computing power we will need. In 2004, we expect to spend substantial amounts to purchase or lease data centers and equipment and to upgrade
our technology and network infrastructure to handle increased traffic on our web sites and to roll out new products and services. This expansion is going to be expensive and complex and could result in inefficiencies or operational failures. If we
do not implement this expansion successfully, or if we experience inefficiencies and operational failures during the implementation, the quality of our products and services and our users experience could decline. This could damage our
reputation and lead us to lose current and potential users, advertisers and Google Network members. The costs associated with these adjustments to our architecture could harm our operating results. Cost increases, loss of traffic or failure to
accommodate new technologies or changing business requirements could harm our operating results and financial condition.

We rely on bandwidth providers, data centers or other third parties for key aspects of the process of providing products and services to our users,
and any failure or interruption in the services and products provided by these third parties could harm our ability to operate our business and damage our reputation.

We rely on third-party vendors, including data center and bandwidth providers. Any disruption in the network access or
co-location services provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business. Any financial or other difficulties our providers face may
have negative effects on our business, the nature and extent of which we cannot predict. We exercise little control over these third party vendors, which increases our vulnerability to problems with the services they provide. We license technology
and related databases from third parties to facilitate aspects of our data center and connectivity operations including, among others, Internet traffic management services. We have experienced and expect to continue to experience interruptions and
delays in service and availability for such elements. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services could negatively impact our relationship with users and
adversely affect our brand and our business and could expose us to liabilities to third parties.

Our systems are also heavily reliant on the availability of electricity, which also comes from third-party providers. If we were to experience a major
power outage, we would have to rely on back-up generators. These back-up generators may not operate properly through a major power outage and their fuel supply could also be inadequate during a major power outage. This could result in a disruption
of our business.

Our provision of our products and services depends on the continuing
operation of our information technology and communications systems. Any damage to or failure of our systems could result in interruptions in our service. Interruptions in our service could reduce our revenues and profits, and our brand could be
damaged if people believe our system is unreliable. Our systems are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service
attacks or other attempts to harm our systems, and similar events. Some of our data centers are located in areas with a high risk of major earthquakes. Our data centers are also subject to break-ins, sabotage and intentional acts of vandalism, and
to potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a
decision to close a facility we are using without adequate notice for financial reasons or other unanticipated problems at our data centers could result in lengthy interruptions in our service.

We have experienced system failures in the past and may in the future. For example, in November 2003 we
failed to provide web search results for approximately 20% of our traffic for a period of about 30 minutes. Any unscheduled interruption in our service puts a burden on our entire organization and would result in an immediate loss of revenue. If we
experience frequent or persistent system failures on our web sites, our reputation and brand could be permanently harmed. The steps we have taken to increase the reliability and redundancy of our systems are expensive, reduce our operating margin
and may not be successful in reducing the frequency or duration of unscheduled downtime.

More individuals are using non-PC devices to access the Internet, and versions of our web search technology developed for these devices may not be widely adopted by users of these devices.

The number of people who access the Internet through devices other than
personal computers, including mobile telephones, hand-held calendaring and email assistants, and television set-top devices, has increased dramatically in the past few years. The lower resolution, functionality and memory associated with alternative
devices make the use of our products and services through such devices difficult. If we are unable to attract and retain a substantial number of alternative device users to our web search services or if we are slow to develop products and
technologies that are more compatible with non-PC communications devices, we will fail to capture a significant share of an increasingly important portion of the market for online services.

If we account for employee stock options using the fair value method,
it could significantly reduce our net income.

There has been ongoing public debate whether stock options granted to employees should be treated as a compensation expense and, if so, how to properly value such charges. On March 31, 2004, the Financial Accounting Standard Board (FASB)
issued an Exposure Draft, Share-Based Payment: an amendment of FASB Statements No. 123 and 95, which would require a company to recognize, as an expense, the fair value of stock options and other stock-based compensation to employees
beginning in 2005 and subsequent reporting periods. Currently, we record deferred stock-based compensation to the extent that the deemed value of the stock on the date of grant exceeds the exercise price of the option. We recognize compensation
expense as we amortize the deferred stock-based compensation amounts on an accelerated basis over the related vesting periods. If we had used the fair value method of accounting for stock options granted to employees prior to April 1, 2004 using a
Black Scholes option valuation formula, our net income would have been $2.4 million less than reported in the year ended December 31, 2003 and $900,000 less than reported in the three months ended March 31, 2004. If we elect or are required to
record an expense for our stock-based compensation plans using the fair value method as described in the Exposure Draft, we could have on-going accounting charges significantly greater than those we would have recorded under our current method of
accounting for stock options. See Note 1 of Notes to Consolidated Financial Statements included in this prospectus for a more detailed presentation of accounting for stock-based compensation plans.

We have recognized cost of revenue, and may continue to recognize cost
of revenue, in connection with minimum fee guarantee commitments with our Google Network members.

We have entered into, and may continue to enter into, minimum fee guarantee agreements with a small number of Google Network members. In these agreements,
we promise to make minimum payments to the Google Networks member for a pre-negotiated period of time, typically from three months to a year or more. If the fees we earn under an agreement are less than the fees we are obligated to pay to a Google
Network member, we recognize cost of revenue to the extent of the difference. It is difficult to forecast with certainty the fees that we will earn under our agreements, and sometimes the fees we earn fall short of the minimum guarantee payment
amounts. Also, increasing competition for arrangements with web sites that are potential Google Network members could result in our entering into more of these minimum fee guarantee agreements under which guaranteed payments exceed the fees we
receive from the Google Network member. In each period to date, the aggregate fees we have earned under these agreements have exceeded the aggregate amounts we have been

obligated to pay to the Google Network members. However, individual agreements have resulted in our recognition of cost of revenues as a result of our
minimum fee guarantees. In 2003, we recognized an aggregate of approximately $22.5 million in cost of revenue related to those agreements. In the three-month period ending March 31, 2004, we recognized an aggregate of approximately $9.0 million in
cost of revenue related to those agreements. At December 31, 2003, our aggregate outstanding minimum guarantee commitments totaled approximately $527.4 million. At March 31, 2004 our aggregate outstanding minimum guarantee commitments totaled
approximately $544.8 million. These commitments expire between 2004 and 2007. We may recognize cost of revenues in the future in connection with these agreements, which could adversely affect our profitability.

To the extent our net revenues are paid in foreign currencies, and
currency exchange rates become unfavorable, we may lose some of the economic value of the net revenues in U.S. dollar terms.

As we expand our international operations, more of our customers may pay us in foreign currencies. Conducting business in currencies other than U.S.
dollars subjects us to fluctuations in currency exchange rates. If the currency exchange rates were to change unfavorably, the value of net receivables we receive in foreign currencies and later convert to U.S. dollars after the unfavorable change
would be diminished. This could have a negative impact on our reported operating results. Hedging strategies, such as forward contracts, options and foreign exchange swaps related to transaction exposures, that we may implement to mitigate this risk
may not eliminate our exposure to foreign exchange fluctuations. Additionally, hedging programs expose us to risks that could adversely affect our operating results, including the following:



We have limited experience in implementing or operating hedging programs. Hedging programs are inherently risky and we could lose money as a result of poor trades.



We may be unable to hedge currency risk for some transactions because of a high level of uncertainty or the inability to reasonably estimate our foreign exchange
exposures.



We may be unable to acquire foreign exchange hedging instruments in some of the geographic areas where we do business, or, where these derivatives are available, we may not be able
to acquire enough of them to fully offset our exposure.

We rely on insurance to mitigate some risks and, to the extent the cost of insurance increases or we are unable to maintain sufficient insurance to
mitigate the risks, our operating results may be diminished.

We contract for insurance to cover potential risks and liabilities. In the current environment, insurance companies are increasingly specific about what they will and will not insure. It is possible that we may not be
able to get enough insurance to meet our needs, may have to pay very high prices for the coverage we do get or may not be able to acquire any insurance for certain types of business risk. This could leave us exposed to potential claims. If we were
found liable for a significant claim in the future, our operating results could be negatively impacted. Also, to the extent the cost of maintaining insurance increases, our operating results will be negatively affected.

Acquisitions could result in operating difficulties, dilution and other
harmful consequences.

We do not have a great deal of
experience acquiring companies and the companies we have acquired have been small. We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions. From time to time, we may engage in discussions regarding
potential acquisitions. Any of these transactions could be material to our financial condition and results of operations. In addition, the process of integrating an acquired company, business or technology may create unforeseen operating
difficulties and expenditures and is risky. The areas where we may face risks include:



The need to implement or remediate controls, procedures and policies appropriate for a larger public company at companies that prior to the acquisition lacked these controls,
procedures and policies.

Diversion of management time and focus from operating our business to acquisition integration challenges.



Cultural challenges associated with integrating employees from the acquired company into our organization.



Retaining employees from the businesses we acquire.



The need to integrate each companys accounting, management information, human resource and other administrative systems to permit effective management.

Foreign acquisitions involve unique risks in
addition to those mentioned above, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries. Also, the
anticipated benefit of many of our acquisitions may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization
expenses, or write-offs of goodwill, any of which could harm our financial condition. Future acquisitions may require us to obtain additional equity or debt financing, which may not be available on favorable terms or at all.

We occasionally become subject to commercial disputes that could
harm our business by distracting our management from the operation of our business, by increasing our expenses and, if we do not prevail, by subjecting us to potential monetary damages and other remedies.

From time to time we are engaged in disputes regarding our commercial
transactions. These disputes could result in monetary damages or other remedies that could adversely impact our financial position or operations. Even if we prevail in these disputes, they may distract our management from operating our business and
the cost of defending these disputes would reduce our operating results.

We have to keep up with rapid technological change to remain competitive in our rapidly evolving industry.

Our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our services to evolving industry standards and to
improve the performance and reliability of our services. Our failure to adapt to such changes would harm our business. New technologies and advertising media could adversely affect us. In addition, the widespread adoption of new Internet, networking
or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt our services or infrastructure.

Our business depends on increasing use of the Internet by users searching for information, advertisers marketing products and services
and web sites seeking to earn revenue to support their web content. If the Internet infrastructure does not grow and is not maintained to support these activities, our business will be harmed.

Our success will depend on the continued growth and maintenance of the
Internet infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data capacity and security for providing reliable Internet services. Internet infrastructure may be unable to support the demands placed on
it if the number of Internet users continues to increase, or if existing or future Internet users access the Internet more often or increase their bandwidth requirements. In addition, viruses, worms and similar programs may harm the performance of
the Internet. The Internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet
usage as well as our ability to provide our solutions.

Shares issued and options granted under our stock plans exceeded limitations in federal and
state securities laws, the result of which is that the holders of these shares and/or options have rescission rights that could require us to reacquire the shares and/or options for an aggregate repurchase price of up to $39.9 million.

Shares issued and options granted under our
1998 Stock Plan and our 2003 Stock Plan were not exempt from registration or qualification under federal and state securities laws and we did not obtain the required registrations or qualifications. Shares issued and options granted under our 2003
Stock Plan (No. 2) and our 2003 Stock Plan (No. 3) were not exempt from registration or qualification under federal securities laws and we did not obtain the required registrations or qualifications. As a result, we intend to make a rescission offer
to the holders of these shares and options as soon as practicable after the completion of the offering of our Class A common stock and, in any event within 30 days of the effective date of this registration statement, assuming the offering has been
completed at such time. If this rescission offer is accepted, we could be required to make aggregate payments to the holders of these shares and options of up to $39.9 million, which includes statutory interest. Federal securities laws do not
expressly provide that a rescission offer will terminate a purchasers right to rescind a sale of stock that was not registered as required. If any or all of the offerees reject the rescission offer, we may continue to be liable under federal
and state securities laws for up to an amount equal to the aggregate exercise price of all options granted since September 2001 plus statutory interest. See Rescission Offer.

Risks Related to the Auction Process for Our Offering

Our stock price could decline rapidly and significantly.

Our initial public offering price will be
determined by an auction process conducted on our behalf by our underwriters. We believe this auction process will provide information with respect to the market demand for our Class A common stock at the time of our initial public offering.
However, this information may have no relation to market demand for our Class A common stock once trading begins. We expect that the bidding process will reveal a clearing price for shares of our Class A common stock offered in the auction. The
auction clearing price is the highest price at which all of the shares offered (including shares subject to the underwriters over-allotment option) may be sold to potential investors. Although we and our underwriters have the ability to set
the initial public offering price below the auction clearing price, we intend to set an initial public offering price that is equal to or near the clearing price. If there is little or no demand for our shares at or above the initial public offering
price once trading begins, the price of our shares would decline following our initial public offering.

The auction process for our public offering may result in a phenomenon known as the winners curse, and, as a result, investors may
experience significant losses.

The auction process
for our initial public offering may result in a phenomenon known as the winners curse. At the conclusion of the auction, bidders that receive allocations of shares in this offering (successful bidders) may infer that there is
little incremental demand for our shares above or equal to the initial public offering price. As a result, successful bidders may conclude that they paid too much for our shares and could seek to immediately sell their shares to limit their losses
should our stock price decline. In this situation, other investors that did not submit successful bids may wait for this selling to be completed, resulting in reduced demand for our Class A common stock in the public market and a significant decline
in our stock price. Therefore, we caution investors that submitting successful bids and receiving allocations may be followed by a significant decline in the value of their investment in our Class A common stock shortly after our offering.

The auction process for our initial public
offering may result in a situation in which less price sensitive investors play a larger role in the determination of our offering price and constitute a larger portion of the investors in our offering, and, therefore, the offering price may not be
sustainable once trading of our Class A common stock begins.

In a typical initial public offering, a majority of the shares sold to the public are purchased by professional investors that have significant experience in determining valuations for companies in connection with
initial

public offerings. These professional investors typically have access to, or conduct their own independent, research and analysis regarding investments in
initial public offerings. Other investors typically have less access to this level of research and analysis, and as a result, may be less sensitive to price in participating in our auction process. Because of our auction process and the broad
consumer awareness of Google, these less price sensitive investors may have a greater influence in setting our initial public offering price and may have a higher level of participation in our offering than is normal for initial public offerings.
This, in turn, could cause our auction process to result in an initial public offering price that is higher than the prices professional investors are willing to pay. As a result, our stock price may decrease once trading of our Class A common stock
begins. Also, because professional investors may have a substantial degree of influence on the trading price of our shares over time, the price of our Class A common stock may decline after our offering. Further, if our initial public offering price
is above the level that investors determine is reasonable for our shares, some investors may attempt to short the stock after trading begins, which would create additional downward pressure on the trading price of our Class A common stock.

Successful bidders should not expect to sell
our shares for a profit shortly after our Class A common stock begins trading.

During the bidding process, we and our managing underwriters will monitor the master order book to evaluate the demand that exists for our initial public
offering. Based on this information, we and our underwriters may revise the price range for our initial public offering set forth on the cover of this prospectus. In addition, we and the selling stockholders may decide to change the number of shares
of Class A common stock offered through this prospectus. It is very likely that the number of shares will increase if the price range increases. These increases in the initial public offering price and the number of shares offered may result in
there being little or no demand for our shares at or above the initial public offering price. If this were to occur, the price of our shares would decline following this offering. If your objective is to make a short term profit by selling the
shares you purchase in the offering shortly after trading begins, you should not submit a bid in the auction.

Successful bidders may receive the full number of shares subject to their bids, so potential investors should not make bids for more shares than
they are prepared to purchase.

We and our
underwriters will conduct an auction to assess the demand for our shares of Class A common stock. We intend to set the initial public offering price equal to or near the auction clearing price. If we do this, the number of shares represented by
successful bids will equal or nearly equal the number of shares offered by this prospectus, and successful bidders may be allocated all or nearly all of the shares that they bid for in the auction. Therefore, we caution investors against submitting
a bid that does not accurately represent the number of shares of our Class A common stock that they are willing and prepared to purchase.

Our initial public offering price may have little or no relationship to the price that would be established using traditional valuation methods, and
therefore, the initial public offering price may not be sustainable once trading begins.

We intend to set an initial public offering price that is equal to or near the auction clearing price. The offering price of our shares may have little or
no relationship to the price that would be established using traditional indicators of value, such as our future prospects and those of our industry in general; our sales, earnings and other financial and operating information; multiples of
earnings, cash flows, and other operating metrics; market prices of securities and other financial and operating information of companies engaged in activities similar to ours; and the views of research analysts. As a result, our initial public
offering price may not be sustainable once trading begins, and the price of our Class A common stock may decline.

If research analysts publish or establish target prices for our Class A common stock that are
below the initial public offering price or then current trading market price of our shares, the price of our shares of Class A common stock may fall.

Although the initial public offering price of our shares may have little or no relationship to the price determined
using traditional valuation methods, we believe that research analysts will rely upon these methods to establish target prices for our Class A common stock. If research analysts, including research analysts affiliated with our underwriters, publish
target prices for our Class A common stock that are below our initial public offering price or the then current trading market price of our shares, it could cause our stock price to decline significantly.

Submitting a bid does not guarantee an allocation of shares of our
Class A common stock, even if a bidder submits a bid at or above the initial public offering price.

Our underwriters may require that bidders confirm their bids before the auction for our initial public offering closes. If a bidder is requested to
confirm a bid and fails to do so, that bid will be rejected and will not receive an allocation of shares even if the bid is at or above the initial public offering price. In addition, we, in consultation with our underwriters, may determine that
some bids that are at or above the initial public offering price are manipulative and disruptive to the bidding process, in which case such bids will be rejected.

The systems and procedures used to implement our auction and the results of our auction could harm our business and
our brand.

Only a small number of initial public
offerings have been accomplished using auction processes in the U.S. and other countries, and we expect our auction structure to face scalability and operational challenges. Our underwriters systems that manage the auction process could fail
to operate as anticipated. This could require us to delay our initial public offering, potentially even after our underwriters have started taking bids, and harm our brand. Our underwriters must modify their internal systems and procedures to
accommodate our auction process. This could increase the risk that our underwriters systems or procedures fail to operate as anticipated.

Many of our users may submit bids in our auction with the hope of becoming stockholders. If these users either do not receive share allocations in our
offering or if our share price immediately declines after the offering, our brand could be tarnished and users and investors could become frustrated with us, potentially decreasing their use of our products and services. If this occurs, our business
could suffer.

Risks Related to Our Offering

Our stock price may be volatile, and you may not be able to resell
shares of our Class A common stock at or above the price you paid.

Prior to this offering, our common stock has not been traded in a public market. We cannot predict the extent to which a trading market will develop or how liquid that market might become. The initial public offering
price may not be indicative of prices that will prevail in the trading market. The trading price of our Class A common stock following this offering is therefore likely to be highly volatile and could be subject to wide fluctuations in price in
response to various factors, some of which are beyond our control. These factors include:



Quarterly variations in our results of operations or those of our competitors.



Announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments.



Disruption to our operations or those of our Google Network members or our data centers.



The emergence of new sales channels in which we are unable to compete effectively.



Our ability to develop and market new and enhanced products on a timely basis.

Changes in governmental regulations or in the status of our regulatory approvals.



Changes in earnings estimates or recommendations by securities analysts.



General economic conditions and slow or negative growth of related markets.

In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme
price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Such fluctuations may be even more pronounced in the trading market shortly following this offering. These broad market
and industry factors may seriously harm the market price of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a
companys securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our managements attention and
resources.

We may apply the proceeds of this offering to
uses that do not improve our operating results or increase the value of your investment.

We intend to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures. We may also use a
portion of the net proceeds to acquire or invest in companies and technologies that we believe will complement our business. However, we do not have more specific plans for the net proceeds from this offering and will have broad discretion in how we
use the net proceeds of this offering. These proceeds could be applied in ways that do not improve our operating results or increase the value of your investment.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of our Class A
common stock is substantially higher than the net tangible book value per share of our Class A common stock immediately after this offering. Therefore, if you purchase our Class A common stock in this offering, you will incur an immediate dilution
of $ in net tangible book value per share from the price you paid, based on the initial offering price of $ per share. The exercise of outstanding
options and warrants will result in further dilution. For a further description of the dilution that you will experience immediately after this offering, please see Dilution.

We do not intend to pay dividends on our common stock.

We have never declared or paid any cash dividend on our capital stock. We
currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

We will incur increased costs as a result of being a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private
company. We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including requirements under the Sarbanes-Oxley
Act of 2002, as well as new rules implemented by the Securities and Exchange Commission and the NYSE and Nasdaq. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more
time-consuming and costly. We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are

After our offering, our Class B common stock will have ten votes per share and our Class A common stock, which is the stock
we are selling in this offering, will have one vote per share. We anticipate that our founders, executive officers, directors (and their affiliates) and employees will together own approximately % of our Class B common stock,
representing approximately % of the voting power of our outstanding capital stock. In particular, following this offering, our two founders and our CEO, Larry, Sergey and Eric, will control approximately
% of our outstanding Class B common stock, representing approximately % of the voting power of our outstanding capital stock. Larry, Sergey and Eric will therefore have significant influence over
management and affairs and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. In
addition, because of this dual class structure, our founders, directors, executives and employees will continue to be able to control all matters submitted to our stockholders for approval even if they come to own less than 50% of the outstanding
shares of our common stock. This concentrated control will limit your ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. As a result, the market price of our Class A common
stock could be adversely affected.

Provisions in our
charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Provisions in our certificate of incorporation and bylaws, as amended and restated upon the closing of this offering, may have the effect of delaying or
preventing a change of control or changes in our management. These provisions include the following:



Our certificate of incorporation provides for a dual class common stock structure. As a result of this structure our founders, executives and employees will have significant
influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets. This concentrated control could discourage others
from initiating any potential merger, takeover or other change of control transaction that other stockholders may view as beneficial.



Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director,
which prevents stockholders from being able to fill vacancies on our board of directors.



Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions without
holding a stockholders meeting.



Our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates.



Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders meeting.
These provisions may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquirors own slate of directors or otherwise attempting to obtain control of our company.



Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to authorize undesignated preferred stock makes it possible for
our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under
Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the
transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us. For a description of our capital stock, see Description of Capital Stock.

Future sales of shares by could cause our stock price to decline.

We cannot predict the effect, if any, that market
sales of shares or the availability of shares for sale will have on the market price prevailing from time to time. Sales of our Class A common stock in the public market after the restrictions described in this prospectus lapse, or the perception
that those sales may occur, could cause the trading price of our stock to decrease or to be lower than it might be in the absence of those sales or perceptions. Based on shares outstanding as of
2004, upon completion of this offering, we will have outstanding
shares of common stock, assuming no exercise of the underwriters over-allotment option. Of these shares, only the shares of Class A common stock
sold in this offering will be freely tradable, without restriction, in the public market. We have entered into contractual lock-up agreements with our officers, directors and certain employees and other securityholders, representing the holders of
substantially all of our outstanding capital stock. We may, in our sole discretion, permit our officers, directors, employees and current stockholders who are subject to contractual lock-up agreements with us to sell shares prior to the expiration
of their lock-up agreements. None of our officers, directors, employees or stockholders have entered into contractual lock-up agreements with the underwriters in connection with this offering.

After the selling restriction agreements pertaining to this offering expire,
additional shares will be eligible for sale in the public market as follows:

Days After the Date of this Prospectus

Number of Shares

Eligible for Sale in

U.S. Public Market/

Percent of Outstanding

Common Stock

Comment

At days after the date of this prospectus and various times thereafter

At days after the date of this prospectus and various times thereafter

At days after the date of this prospectus and various times thereafter

At days after the date of this prospectus and various dates thereafter

of these shares are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under
the Securities Act and various vesting agreements. In addition, the shares issuable upon exercise of outstanding warrants and the
shares issuable upon exercise of outstanding options and reserved for future issuance under our stock plans will become eligible for sale in the public
market to the extent permitted by the provisions of various vesting agreements, the selling restriction agreements and Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act. If these additional shares are sold, or if
it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

In addition, we have agreed with our underwriters not to sell any shares of our common stock for a period of 180 days after the date of this prospectus.
However, this agreement is subject to a number of exceptions, including an exception that allows us to issue an unlimited number of shares in connection with mergers and acquisition transactions, joint ventures or other strategic transactions.
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston LLC, on behalf of the underwriters, may release us from this lock-up arrangement without notice at any time. After the expiration of the 180-day period, there is no contractual
restriction on our ability to issue additional shares. Any sales of common stock by us, or the perception that such sales could occur, could cause our stock price to decline.

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business
strategy and plans and objectives of management for future operations, are forward-looking statements. The words believe, may, will, estimate, continue, anticipate,
intend, expect and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial
trends that we believe may affect our financial condition, results of operations, business strategy, short term and long term business operations and objectives, and financial needs. In addition, a number of our objectives,
intentions, expectations or goals described in Auction Process for qualification of bidders, the bidding process, the auction closing process, the pricing process and the allocation process are also
forward-looking statements. These statements are based on current expectations or objectives of the auction process being used for our initial public offering that are inherently uncertain. These forward-looking statements are subject to a number of
risks, uncertainties and assumptions, including those described in Risk Factors.

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those
anticipated or implied in the forward-looking statements.

Google is not a conventional company. We do not intend to become one. Throughout Googles evolution as a privately held company, we have managed
Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.

Now the time has come for the company to move to public ownership. This
change will bring important benefits for our employees, for our present and future shareholders, for our customers, and most of all for Google users. But the standard structure of public ownership may jeopardize the independence and focused
objectivity that have been most important in Googles past success and that we consider most fundamental for its future. Therefore, we have implemented a corporate structure that is designed to protect Googles ability to innovate and
retain its most distinctive characteristics. We are confident that, in the long run, this will benefit Google and its shareholders, old and new. We want to clearly explain our plans and the reasoning and values behind them. We are delighted you are
considering an investment in Google and are reading this letter.

Sergey and I intend to write you a letter like this one every year in our annual report. Well take turns writing the letter so youll hear directly from each of us. We ask that you read this letter in conjunction with the rest of
this prospectus.

SERVING END USERS

Sergey and I founded Google because we believed we could provide an
important service to the worldinstantly delivering relevant information on virtually any topic. Serving our end users is at the heart of what we do and remains our number one priority.

Our goal is to develop services that significantly improve the lives of
as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious. For example, we make our services as widely available as we can by
supporting over 90 languages and by providing most services for free. Advertising is our principal source of revenue, and the ads we provide are relevant and useful rather than intrusive and annoying. We strive to provide users with great commercial
information.

We are proud of the products we have built,
and we hope that those we create in the future will have an even greater positive impact on the world.

LONG TERM FOCUS

As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same. In our opinion, outside pressures too often tempt companies to sacrifice long term opportunities to meet
quarterly market expectations. Sometimes this pressure has caused companies to manipulate financial results in order to make their quarter. In Warren Buffetts words, We wont smooth quarterly or annual
results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.

If opportunities arise that might cause us to sacrifice short term results but are in the best long term interest of our shareholders, we will take
those opportunities. We will have the fortitude to do this. We would request that our shareholders take the long term view.

1 Much of this was inspired by Warren Buffetts essays in his annual reports and his An Owners Manual to Berkshire Hathaway shareholders.

You might ask how long is long term? Usually we expect projects to have some realized benefit or
progress within a year or two. But, we are trying to look forward as far as we can. Despite the quickly changing business and technology landscape, we try to look at three to five year scenarios in order to decide what to do now. We try to optimize
total benefit over these multi-year scenarios. While we are strong advocates of this strategy, it is difficult to make good multi-year predictions in technology.

Many companies are under pressure to keep their earnings in line with analysts forecasts. Therefore, they often
accept smaller, predictable earnings rather than larger and less predictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction.

Google has had adequate cash to fund our business and has generated additional cash through operations. This gives us the
flexibility to weather costs, benefit from opportunities and optimize our long term earnings. For example, in our ads system we make many improvements that affect revenue in both directions. These are in areas like end user relevance and
satisfaction, advertiser satisfaction, partner needs and targeting technology. We release improvements immediately rather than delaying them, even though delay might give smoother financial results. You have our commitment to execute
quickly to achieve long term value rather than making the quarters more predictable.

Our long term focus does have risks. Markets may have trouble evaluating long term value, thus potentially reducing the value of our company. Our long term focus may simply be the wrong business strategy. Competitors
may be rewarded for short term tactics and grow stronger as a result. As potential investors, you should consider the risks around our long term focus.

We will make business decisions with the long term welfare of our company and shareholders in mind and not based on accounting considerations.

Although we may discuss long term trends in our business,
we do not plan to give earnings guidance in the traditional sense. We are not able to predict our business within a narrow range for each quarter. We recognize that our duty is to advance our shareholders interests, and we believe that
artificially creating short term target numbers serves our shareholders poorly. We would prefer not to be asked to make such predictions, and if asked we will respectfully decline. A management team distracted by a series of short term targets is as
pointless as a dieter stepping on a scale every half hour.

RISK VS
REWARD IN THE LONG RUN

Our business environment
changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities.

We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well,
and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10% chance of earning a billion dollars over the long
term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange when compared to our current businesses. Although we cannot quantify the specific level of risk we will undertake, as the ratio of reward to risk
increases, we will accept projects further outside our current businesses, especially when the initial investment is small relative to the level of investment in our current businesses.

We encourage our employees, in addition to their regular projects, to spend
20% of their time working on what they think will most benefit Google. This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner. For example, AdSense for content and Google News were both
prototyped in 20% time. Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.

As we seek to maximize value in the long term, we may have quarter-to-quarter volatility as we
realize losses on some new projects and gains on others. We would love to better quantify our level of risk and reward for you going forward, but that is very difficult. Even though we are excited about risky projects, we expect to devote the vast
majority of our resources to improvements to our main businesses (currently search and advertising). Most employees naturally gravitate toward incremental improvements in core areas so this tends to happen naturally.

EXECUTIVE ROLES

We run Google as a triumvirate. Sergey and I have worked closely together for the last eight years, five at Google. Eric,
our CEO, joined Google three years ago. The three of us run the company collaboratively with Sergey and me as Presidents. The structure is unconventional, but we have worked successfully in this way.

To facilitate timely decisions, Eric, Sergey and I meet daily to update
each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for
each other and we generally think alike. Because of our intense long term working relationship, we can often predict differences of opinion among the three of us. We know that when we disagree, the correct decision is far from obvious. For important
decisions, we discuss the issue with a larger team appropriate to the task. Differences are resolved through discussion and analysis and by reaching consensus. Eric, Sergey and I run the company without any significant internal conflict, but with healthy debate. As different topics come up, we often delegate decision-making
responsibility to one of us.

We hired Eric as a more
experienced complement to Sergey and me to help us run the business. Eric was CTO of Sun Microsystems. He was also CEO of Novell and has a Ph.D. in computer science, a very unusual and important combination for Google given our scientific and
technical culture. This partnership among the three of us has worked very well and we expect it to continue. The shared judgments and extra energy available from all three of us has significantly benefited Google.

Eric has the legal responsibilities of the CEO and focuses on management
of our vice presidents and the sales organization. Sergey focuses on engineering and business deals. I focus on engineering and product management. All three of us devote considerable time to overall management of the company and other fluctuating
needs. We also have a distinguished board of directors to oversee the management of Google. We have a talented executive staff that manages day-to-day operations in areas such as finance, sales, engineering, human resources, public relations, legal
and product management. We are extremely fortunate to have talented management that has grown the company to where it is todaythey operate the company and deserve the credit.

CORPORATE STRUCTURE

We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long
term bet on the team, especially Sergey and me, and on our innovative approach.

We want Google to become an important and significant institution. That takes time, stability and independence. We bridge the media and technology industries, both of which have experienced considerable consolidation
and attempted hostile takeovers.

In the transition to
public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach
emphasized earlier. This structure, called a dual class voting structure, is described elsewhere in this prospectus. The Class A common stock we are offering has one vote per share, while the Class B common stock held by many current shareholders
has 10 votes per share.

The main effect of this structure is likely to leave our team, especially Sergey and me, with
increasingly significant control over the companys decisions and fate, as Google shares change hands. After the IPO, Sergey, Eric and I will control __% of the voting power of Google, and the executive management team and directors as a group
will control __% of the voting power. New investors will fully share in Googles long term economic future but will have little ability to influence its strategic decisions through their voting rights.

While this structure is unusual for technology companies, similar
structures are common in the media business and has had a profound importance there. The New York Times Company, The Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership
structures. Media observers have pointed out that dual class ownership has allowed these companies to concentrate on their core, long term interest in serious news coverage, despite fluctuations in quarterly results. Berkshire Hathaway has
implemented a dual class structure for similar reasons. From the point of view of long term success in advancing a companys core values, we believe this structure has clearly been an advantage.

Some academic studies have shown that from a purely economic point of
view, dual class structures have not harmed the share price of companies. Other studies have concluded that dual class structures have negatively affected share prices, and we cannot assure you that this will not be the case with Google. The shares
of each of our classes have identical economic rights and differ only as to voting rights.

Google has prospered as a private company. We believe a dual class voting structure will enable Google, as a public company, to retain many of the
positive aspects of being private. We understand some investors do not favor dual class structures. Some may believe that our dual class structure will give us the ability to take actions that benefit us, but not Googles shareholders as a
whole. We have considered this point of view carefully, and we and the board have not made our decision lightly. We are convinced that everyone associated with Googleincluding new investorswill benefit from this structure. However, you
should be aware that Google and its shareholders may not realize these intended benefits.

In addition, we have recently expanded our board of directors to include three additional members. John Hennessy is the President of Stanford and has a
Doctoral degree in computer science. Art Levinson is CEO of Genentech and has a Ph.D. in biochemistry. Paul Otellini is President and COO of Intel. We could not be more excited about the caliber and experience of these directors.

We believe we have a world class management team impassioned by
Googles mission and responsible for Googles success. We believe the stability afforded by the dual class structure will enable us to retain our unique culture and continue to attract and retain talented people who are Googles life
blood. Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term.

As an investor, you are placing a potentially risky long term bet on the
team, especially Sergey and me. The two of us, Eric and the rest of the management team recognize that our individual and collective interests are deeply aligned with those of the new investors who choose to support Google. Sergey and I are
committed to Google for the long term. The broader Google team has also demonstrated an extraordinary commitment to our long term success. With continued hard work and good fortune, this commitment will last and flourish.

When Sergey and I founded Google, we hoped, but did not expect, it would
reach its current size and influence. Our intense and enduring interest was to objectively help people find information efficiently. We also believed that searching and organizing all the worlds information was an unusually important task that
should be carried out by a company that is trustworthy and interested in the public good. We believe a well functioning society should have abundant, free and unbiased access to high quality information. Google therefore has a responsibility to the
world. The dual class structure helps ensure that this responsibility is met. We believe that fulfilling this responsibility will deliver increased value to our shareholders.

It is important to us to have a fair process for our IPO that is inclusive of both small and large investors. It is
also crucial that we achieve a good outcome for Google and its current shareholders. This has led us to pursue an auction-based IPO for our entire offering. Our goal is to have a share price that reflects an efficient market valuation of Google that
moves rationally based on changes in our business and the stock market. (The auction process is discussed in more detail elsewhere in this prospectus.)

Many companies going public have suffered from unreasonable speculation, small initial share float, and stock price
volatility that hurt them and their investors in the long run. We believe that our auction-based IPO will minimize these problems, though there is no guarantee that it will.

An auction is an unusual process for an IPO in the United States. Our experience with auction-based advertising systems
has been helpful in the auction design process for the IPO. As in the stock market, if people bid for more shares than are available and bid at high prices, the IPO price will be higher. Of course, the IPO price will be lower if there are not enough
bidders or if people bid lower prices. This is a simplification, but it captures the basic issues. Our goal is to have the price of our shares at the IPO and in the aftermarket reflect an efficient market pricein other words, a price set by
rational and informed buyers and sellers. We seek to achieve a relatively stable price in the days following the IPO and that buyers and sellers receive an efficient market price at the IPO. We will try to achieve this outcome, but of course may not
be successful.

We are working to create a sufficient
supply of shares to meet investor demand at IPO time and after. We are encouraging current shareholders to consider selling some of their shares as part of the offering. These shares will supplement the shares the company sells to provide more
supply for investors and hopefully provide a more stable price. Sergey and I, among others, are currently planning to sell a fraction of our shares in the IPO. The more shares current shareholders sell, the more likely it is that they believe the
price is not unfairly low. The supply of shares available will likely have an effect on the clearing price of the auction. Since the number of shares being sold is likely to be larger at a high price and smaller at a lower price, investors will
likely want to consider the scope of current shareholder participation in the IPO. We may communicate from time to time that we are sellers rather than buyers at certain prices.

While we have designed our IPO to be inclusive for both small and large investors, for a variety of reasons described in
Auction Process not all interested investors will be able to receive an allocation of shares in our IPO.

We would like you to invest for the long term, and you should not expect to sell Google shares for a profit shortly after Googles IPO. We
encourage investors not to invest in Google at IPO or for some time after, if they believe the price is not sustainable over the long term. Even in the long term, the trading price of Googles stock may decline.

We intend to take steps to help ensure shareholders are well informed. We
encourage you to read this prospectus, especially the Risk Factors section. We think that short term speculation without paying attention to price is likely to lose you money, especially with our auction structure. In particular, we caution you that
investing in Google through our auction could be followed by a significant decline in the value of your investment after the IPO.

GOOGLERS

Our employees, who have named themselves Googlers, are everything. Google is organized around the ability to attract and leverage the talent of
exceptional technologists and business people. We have been lucky to recruit many creative, principled and hard working stars. We hope to recruit many more in the future. We will reward and treat them well.

We provide many unusual benefits for our employees, including meals free of
charge, doctors and washing machines. We are careful to consider the long term advantages to the company of these benefits. Expect us to add

benefits rather than pare them down over time. We believe it is easy to be penny wise and pound foolish with respect to benefits that can save employees
considerable time and improve their health and productivity.

The significant employee ownership of Google has made us what we are today. Because of our employee talent, Google is doing exciting work in nearly every area of computer science. We are in a very competitive industry where the quality of
our product is paramount. Talented people are attracted to Google because we empower them to change the world; Google has large computational resources and distribution that enables individuals to make a difference. Our main benefit is a workplace
with important projects, where employees can contribute and grow. We are focused on providing an environment where talented, hard working people are rewarded for their contributions to Google and for making the world a better place.

DONT BE EVIL

Dont be evil. We believe strongly that in the long term, we will be
better servedas shareholders and in all other waysby a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.

Google users trust our systems to help them with
important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display
advertising, which we work hard to make relevant, and we label it clearly. This is similar to a well-run newspaper, where the advertisements are clear and the articles are not influenced by the advertisers payments. We believe it is important
for everyone to have access to the best information and research, not only to the information people pay for you to see.

MAKING THE WORLD A BETTER PLACE

We aspire to make Google an institution that makes the world a better place. With our products, Google connects people and information all around the
world for free. We are adding other powerful services such as Gmail, which provides an efficient one gigabyte Gmail account for free. We know that some people have raised privacy concerns, primarily over Gmails targeted ads, which could lead
to negative perceptions about Google. However, we believe Gmail protects a users privacy. By releasing services, such as Gmail, for free, we hope to help bridge the digital divide. AdWords connects users and advertisers efficiently, helping
both. AdSense helps fund a huge variety of online web sites and enables authors who could not otherwise publish. Last year we created Google Grantsa growing program in which hundreds of non-profits addressing issues, including the environment,
poverty and human rights, receive free advertising. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1% of Googles
equity and profits in some form. We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the worlds problems.

SUMMARY AND CONCLUSION

Google is not a conventional company. Eric, Sergey and I intend to
operate Google differently, applying the values it has developed as a private company to its future as a public company. Our mission and business description are available in the rest of this prospectus; we encourage you to carefully read this
information. We will optimize for the long term rather than trying to produce smooth earnings for each quarter. We will support selected high-risk, high-reward projects and manage our portfolio of projects. We will run the company collaboratively
with Eric, our CEO, as a team of three. We are conscious of our duty as fiduciaries for our shareholders, and we will fulfill those responsibilities. We will continue to strive to attract creative, committed new employees, and we will welcome
support from new shareholders. We will live up to our dont be evil principle by keeping user trust and not accepting payment for search results. We have a dual class structure that is biased toward stability and independence and
that requires investors to bet on the team, especially Sergey and me.

In this letter we have talked about our IPO auction method and our desire for stability and access
for all investors. We have discussed our goal to have investors who invest for the long term. Finally, we have discussed our desire to create an ideal working environment that will ultimately drive the success of Google by retaining and attracting
talented Googlers.

We have tried hard to anticipate your
questions. It will be difficult for us to respond to them given legal constraints during our offering process. We look forward to a long and hopefully prosperous relationship with you, our new investors. We wrote this letter to help you understand
our company.

We have a strong commitment to our users
worldwide, their communities, the web sites in our network, our advertisers, our investors, and of course our employees. Sergey and I, and the team will do our best to make Google a long term success and the world a better place.

The auction
process being used for our initial public offering differs from methods that have been traditionally used in most other underwritten initial public offerings in the United States. In particular, we and our underwriters will conduct an auction to
determine the initial public offering price and the allocation of shares in the offering. We plan to conduct this auction in five stagesQualification; Bidding; Auction Closing; Pricing; and Allocation. Investors that do not submit bids through
the auction process will not be eligible for an allocation of shares in our offering. Please see the risks related to the auction process for our offering beginning on page 19.

The Qualification Process

Our objective is to conduct an auction in which you submit informed bids. Before you can submit a bid, you will be
required to obtain a bidder ID. Your bidder ID will be issued electronically only after you have visited a web site where you can obtain a bidder ID and followed the steps described on the web site and in the Bidder Handbook, which will be included
as an appendix to this prospectus. Before you register for a bidder ID, you should:



Read this prospectus, including all the risk factors.



Understand that our initial public offering price is expected to be set equal to or near the auction clearing price, and, if there is little or no demand for our shares at or above
the initial public offering price once trading begins, the price of our shares would decline.



Understand that we may modify the price range and the size of our offering multiple times in response to investor demand.



Understand that our current stockholders, including our founders and members of our management team, are selling, not buying, shares of Class A common stock as part of our initial
public offering.



Understand that we, in consultation with our underwriters, will have the ability to reject bids that we believe have the potential to manipulate or disrupt the bidding process, and
that if you submit such a bid, all of the bids you have submitted may be rejected in which case you will not receive an allocation of shares in our initial public offering.



Understand that of our existing shares will be available for sale to the public beginning
days after our initial public offering.

When the preliminary prospectus becomes available, you will be able to obtain a bidder ID from a web site. You will not be able to obtain a bidder ID
after our underwriters begin taking bids in the auction for our initial public offering.

We seek to enable all interested investors to have the opportunity to qualify to bid and, following qualification, place bids in the auction for our
initial public offering. To help meet this objective, we have selected an underwriter group that serves a broad range of the investing public.

We caution you that our Class A common stock may not be a suitable investment for you even if you obtain a bidder ID. Moreover, even if you obtain a
bidder ID, you may not be able to bid in the auction if you do not meet the suitability requirements of the underwriter through which you are seeking to place a bid or as a result of other regulatory requirements as described below. Finally, even if
you obtain a bidder ID and place a bid in the auction, you may not receive an allocation of shares in our offering for a number of reasons described below.

We have not undertaken any efforts to register this offering in any jurisdiction outside the U.S. Except to the limited extent that this
offering will be open to certain non-U.S. investors under private placement exemptions in certain countries other than the U.S., individual investors located outside the U.S. should not expect to be eligible to participate in this offering. We would
have liked to have made the offering more broadly available internationally, but myriad international securities regulations and compliance requirements made this impracticable.

Approximately days after the date on the cover of this prospectus, all
investors that have qualified to bid may submit bids indicating their interest in our offering through one of our underwriters. In connection with submitting a bid, you must provide the following information:



The number of shares you are interested in purchasing.



The price per share you are willing to pay.



Additional information to enable the underwriter to identify you, confirm your eligibility and suitability for participating in our initial public offering, and, if you submit a
successful bid, consummate a sale of shares to you.

Bids may be within, above or below the estimated price range for our initial public offering on the cover of this prospectus. Bid prices may be in any increment, including pennies. The minimum size of any bid is five shares. You may submit
more than one bid.

To submit a bid, you should contact
one of the following underwriters:

Morgan Stanley & Co. Incorporated

Credit Suisse First Boston LLC

Allen & Company LLC

Citigroup Global Markets Inc.

Goldman, Sachs & Co.

J.P. Morgan Securities Inc.

Lehman Brothers Inc.

UBS Securities LLC

Thomas Weisel Partners LLC

WR Hambrecht + Co.

Deutsche Bank Securities Inc.

Lazard Freres & Co. LLC

Ameritrade, Inc.

M.R. Beal & Company

William Blair & Company L.L.C.

Blaylock & Partners, L.P.

Cazenove & Co. Ltd

E * TRADE Securities LLC

Epoch Securities, Inc.

Fidelity Capital Markets, a division of National Financial Services, LLC

HARRISdirect LLC

Needham & Company, Inc.

Piper Jaffray & Co.

Samuel A. Ramirez & Company, Inc.

RBC Capital Markets Corporation

Muriel Siebert & Co., Inc.

SunTrust Robinson Humphrey

Utendahl Capital Partners, L.P.

Wachovia Capital Markets, LLC

Wells Fargo Securities, LLC

Each
underwriter has the ability to receive bids from its customers through one or more of the following means: over the Internet, by telephone, by facsimile or in person. To participate in the auction for our initial public offering, you will be
required to agree to accept electronic delivery of this prospectus, the final prospectus,

any amendments to this prospectus or the final prospectus, and other communications related to this offering. If you do not consent to electronic delivery,
or subsequently revoke that consent, you will not be able to submit a bid or participate in our offering. However, your consent to electronic delivery of these documents does not constitute consent by you to electronic delivery of other information
about us not related to this offering, such as proxy statements and quarterly and annual reports, during and after completion of this offering.

If you are interested in submitting a bid but do not currently have a brokerage account with any of the underwriters named above, you may contact one of
these underwriters to inquire about opening an account and submitting a bid. You should be aware that, due to each underwriters requirements for new customer accounts, you may not be able to open an account with a particular underwriter. Even
if you are a customer of one of our underwriters, and even if you have obtained a bidder ID, you may not be permitted to submit a bid if the underwriter through which you wish to submit your bid determines that you do not meet such
underwriters suitability standards or that you are otherwise prohibited from participating in the offering due to regulatory requirements, such as the rules and regulations of the National Association of Securities Dealers.

Our managing underwriters will manage a master order book, to which we
will have concurrent access, that will aggregate all bids collected by our underwriters and will include the identity of the bidders. Our master order book will not be available for viewing by bidders.

You should consider all the information in this prospectus in determining
whether to submit a bid, the number of shares you seek to purchase and the price per share you are willing to pay. We, in consultation with our underwriters, will have the ability to reject bids that have the potential to manipulate or disrupt the
bidding process. Manipulative bids include bids that we, in consultation with our underwriters, believe do not reflect the number of shares that you actually intend to purchase, or a series of bids that we, in consultation with our underwriters,
consider disruptive to the auction process.

The
shares offered by this prospectus may not be sold, nor may offers to buy, be accepted, prior to the time that the registration statement filed with the SEC becomes effective. A bid received by any underwriter involves no obligation or commitment of
any kind by the bidder until our underwriters have notified you that your bid is successful by sending you a notice of acceptance. Therefore, you will be able to withdraw a bid at any time until it has been accepted. Once the registration statement
for our offering becomes effective, the underwriter through which you submitted your bid or bids may require that you deposit funds or securities in your brokerage account with value sufficient to cover the aggregate dollar amount of your bids.

During the bidding process, we and our managing
underwriters will monitor the master order book to evaluate the demand that exists for our initial public offering. Based on this information and other factors, we and our underwriters may revise the public offering price range for our initial
public offering set forth on the cover of this prospectus. In addition, we and the selling stockholders may decide to change the number of shares of Class A common stock offered through this prospectus. It is very likely that the number of shares
offered will increase if the price range increases. You should be aware that we have the ability to make multiple such revisions. These increases in the public offering price range or the number of shares offered through this prospectus may result
in there being little or no demand for our shares of Class A common stock at or above the initial public offering price following this offering. Therefore, the price of our shares of Class A common stock could decline following this offering, and
investors should not expect to be able to sell their shares for a profit shortly after trading begins. You should consider whether to modify or withdraw your bid as a result of developments during the auction process, including changes in the price
range or number of shares offered.

We can close the auction at any time. You will have the ability to modify any bid until the auction is closed. You will
have the ability to withdraw your bid until our underwriters notify you that your bid is successful by sending you a notice of acceptance. If you are requested to confirm a bid and fail to do so, your bid will be rejected.

Before the SEC declares our registration statement effective, you will be
sent an electronic notice indicating the proposed effective date and informing you that we may close the auction at any time either before or after the proposed effective date. This notice will be delivered to bidders contemporaneously with our
request to the SEC that it declare the registration statement effective. When the SEC declares our registration statement effective, you will be sent an electronic notice informing you that the registration statement is effective and that we and our
underwriters may accept successful bids in as little as one hour. Bidders may still withdraw their bids after the underwriters send this notice of effectiveness. However, a bidder cannot withdraw a bid after this one-hour period has expired if that
bid has been accepted by the underwriters by sending an electronic notice of acceptance, regardless of whether the bidders are aware that the registration statement has been declared effective or that the electronic notice of acceptance of that bid
has been sent. If your bid is accepted, you will be obligated to purchase the shares allocated to you in the allocation process.

The Pricing Process

We expect that the bidding process will reveal a clearing price for the shares of Class A common stock offered in our auction. The clearing price is the
highest price at which all of the shares offered (including shares subject to the underwriters over-allotment option) may be sold to potential investors, based on bids in the master order book that have not been withdrawn or rejected at the
time we and our underwriters close the auction.

The
initial public offering price will be determined by us and our underwriters after the auction closes. We intend to use the auction clearing price to determine the initial public offering price and, therefore, to set an initial public offering price
that is equal to or near the clearing price. However, we and our underwriters may elect to set the initial public offering price below the clearing price, thereby achieving a broader distribution of our shares. Although we and our underwriters have
the ability to set the initial public offering price below the auction clearing price, we caution you that our initial public offering price may have little or no relationship to the value that would be established using traditional indicators of
value, such as:



our future prospects and those of our industry in general;



our sales, earnings and other financial and operating information;



multiples of our earnings, cash flows, and other operating metrics;



market prices of securities and other financial and operating information of companies engaged in activities similar to ours; and



research analyst views.

You should understand that the trading price of our Class A common stock could vary significantly from the initial public offering price. Therefore, we
caution you not to submit a bid in the auction process for our offering unless you are interested in investing for the long term and are willing to take the risk that our stock price could decline significantly.

The pricing of our initial public offering will occur after we and our
underwriters have closed the auction and after the registration statement has been declared effective. We will issue a press release to announce the initial public offering price. This information will also be included in the final prospectus that
is delivered to the purchasers of Class A common stock in our offering.

Once the initial public offering price has been determined, we and our underwriters will begin the allocation process.
All investors who submitted successful bids will receive an allocation of shares in our offering. All shares will be sold at the initial public offering price. The allocation process will not give any preference to successful bids based on bid
price.

If we establish an initial public offering
price that is equal to or near the auction clearing price, all successful bidders will be offered share allocations that are equal or nearly equal to the number of shares represented by their successful bids. Therefore, we caution you against
submitting a bid that does not accurately represent the number of shares of our Class A common stock that you are willing and prepared to purchase. If we, in consultation with our underwriters, believe in our sole discretion that your bid does not
reflect the number of shares you actually intend to purchase, we may determine that your bid is manipulative or disruptive. If any of your bids are deemed manipulative or disruptive, all of the bids that you have submitted may be rejected, in which
case you will not receive an allocation of shares in our initial public offering. Furthermore, neither we nor our underwriters will inform you that we have rejected your bids.

In the event that the number of shares represented by successful bids exceeds the number of shares we and the selling
stockholders are offering, the offered shares will need to be allocated across the successful bidder group. We, in consultation with our underwriters, expect to use one of two methods to do sopro rata allocation or maximum share allocation.
With either method, our objective is to set an initial public offering price where successful bidders receive at least 80% of the shares they successfully bid for in the auction.

Pro Rata Allocation. With pro rata allocation, successful bidders will receive share
allocations on a pro rata basis based on the following rules:



The pro rata allocation percentage will be determined by dividing the number of shares we and the selling stockholders are offering (including shares subject to the
underwriters over-allotment option) by the number of shares represented by valid successful bids.



Each bidder who has a successful bid will be allocated a number of shares equal to the pro rata allocation percentage multiplied by the number of shares represented by the
successful bid, rounded to the nearest whole number of shares.

The following simplified, hypothetical example illustrates how pro rata allocation might work in practice:

Maximum Share Allocation. With maximum share allocation, successful bidders
will receive share allocations based on an algorithm. Under this method, successful bidders with smaller bid sizes would receive share allocations for their entire bid amounts, while successful bidders with larger bid sizes would receive no more
than a maximum share allocation to be determined using the following algorithm:



The total of all share allocations must equal the total number of shares we and the selling stockholders are offering (including any shares subject to the over-allotment option).



Each successful bidder will receive a share allocation equal to the lesser of the number of shares represented by their successful bid and the maximum share allocation.



The maximum share allocation would be a number of shares that results in the full allocation of shares being offered.

The following simplified, hypothetical example illustrates how maximum share
allocation might work in practice:

We may designate tiers of bidders for purposes of allocation. Although we have
not yet determined whether or how we would implement a tiered allocation structure, the tiers would not be a factor in establishing the initial public offering price or in determining the size of the offering. If we were to implement a tiered
allocation structure, we would divide the successful bidders into segments, or tiers, and assign bidders to tiers based on factors such as the size of their bids. This would require us to determine how many shares to allocate to each
tier. The portion of the total shares offered in our initial public offering that are allocated to a tier may be different from the portion of the total shares successfully bid for in our auction that were bid for by bidders in that tier. Following
the assignment of shares to each tier, we would apply either the maximum share or pro rata allocation within each tier. Our objective is that, regardless of any tiering allocations that we may implement, no successful bidder will be allocated less
than 80% of the shares he or she successfully bid for in the auction.

Following the allocation process, our underwriters will provide successful bidders with a final prospectus and confirmations that detail their purchases of shares of our Class A common stock and the purchase price.
The final prospectus will be delivered electronically and confirmation will be delivered by mail, facsimile or over the Internet.

We estimate that
we will receive net proceeds of $ from our sale of the shares of Class A common stock offered by us in
this offering, based upon an assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters
over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $ . We will not receive any of the net proceeds from the sale of the shares by
the selling stockholders.

We currently have no specific
plans for the use of the net proceeds of this offering. We anticipate that we will use the net proceeds received by us from this offering for general corporate purposes, including working capital.

In addition, we may use a portion of the proceeds of this offering for
acquisitions of complementary businesses, technologies or other assets. We have no current agreements or commitments with respect to any material acquisitions.

Pending such uses, we plan to invest the net proceeds in highly liquid, investment grade securities.

DIVIDEND POLICY

We have never
declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

CASH AND CAPITALIZATION

The
following table sets forth our cash, cash equivalents, short-term investments and capitalization at March 31, 2004, as follows:



On an actual basis, assuming the reclassification of our legally outstanding shares of Class A Senior common stock into 162,565,747 shares of Class B common stock and our common
stock into 11,920,766 shares of Class A common stock.



On a pro forma basis to reflect the conversion of all of our outstanding preferred stock into an aggregate of 71,662,432 shares of Class B common stock, which will occur prior
to the completion of the offering.



On a pro forma as adjusted basis to give effect to receipt of the net proceeds from the sale by us in this offering of shares of Class A common stock at an assumed initial public
offering price of $ per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses.

You should read this table in conjunction with Selected Consolidated Financial Data,
Managements Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes included elsewhere in this prospectus.

10,945,942 shares of Class A and Class B common stock subject to repurchase that were granted and exercised subsequent to March 21, 2002 (see Note 1 of Notes to Consolidated
Financial Statements included as part of this prospectus).



9,533,592 shares of Class B common stock issuable upon the exercise of warrants outstanding at March 31, 2004, with a weighted average exercise price of $2.42 per share.



5,962,471 shares of Class A common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $5.34 per share.



10,613,809 shares of Class B common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $2.10 per share.



4,593,458 shares of common stock available for future issuance under our stock option plans at March 31, 2004.

If you invest in our
Class A common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our Class A and
Class B common stock immediately after this offering. Pro forma net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of Class A and Class B common stock
outstanding at March 31, 2004 after giving effect to the conversion of all of our Class A Senior common stock and preferred stock into Class B common stock and the conversion of all of our common stock into Class A common stock, which will
occur immediately prior to the completion of the offering.

Investors participating in this offering will incur immediate, substantial dilution. Our pro forma net tangible book value was $621.6 million, computed as total stockholders equity less goodwill and other intangible assets, or $2.53
per share of Class A and Class B common stock and preferred stock at March 31, 2004. Assuming the sale by us of shares of Class A common stock offered in this offering at an initial public offering price of
$ per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at March 31,
2004, would have been $ million, or $ per share of common stock. This represents an immediate increase in
pro forma net tangible book value of $ per share of common stock to our existing stockholders and an immediate dilution of
$ per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share of Class A common stock

$

Pro forma net tangible book value per share at March 31, 2004

$

2.53

Increase in pro forma net tangible book value per share attributable to this offering

Pro forma as adjusted net tangible book value per share after the offering

Dilution per share to new investors

$

The following
table sets forth on a pro forma as adjusted basis, at March 31, 2004, the number of shares of Class A common stock purchased or to be purchased from us, the total consideration paid or to be paid and the average price per share paid or to be paid by
existing holders of common stock, by holders of options and warrants outstanding at March 31, 2004, and by the new investors, before deducting estimated underwriting discounts and estimated offering expenses payable by us.

Shares Purchased

Total Consideration

Average PricePer Share

Number

Percent

Amount

Percent

Existing stockholders

%

$

%

$

New investors

%

%

$

Total

100.0

%

$

100.0

%

The discussion and
tables above are based on the number of shares of common stock and preferred stock outstanding at March 31, 2004.

The discussion and tables above (except for the last table above) exclude the following shares:



9,533,592 shares of Class B common stock issuable upon the exercise of warrants outstanding, at March 31, 2004, at a weighted average exercise price of $2.42 per share.



5,962,471 shares of Class A common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $5.34 per share.



10,613,809 shares of Class B common stock issuable upon the exercise of options outstanding at March 31, 2004, at a weighted average exercise price of $2.10 per share.



4,593,458 shares of common stock available for future issuance under our stock option plans at March 31, 2004.

To the extent outstanding options and warrants are exercised, new investors
will experience further dilution.

You should read the following selected consolidated financial data in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the
related notes appearing elsewhere in this prospectus.

The
consolidated statements of operations data for the years ended December 31, 2001, 2002 and 2003, and the consolidated balance sheet data at December 31, 2002 and 2003, are derived from our audited consolidated financial statements appearing
elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 1999 and December 31, 2000, and the consolidated balance sheet data at December 31, 1999, 2000 and 2001, are derived from our audited
consolidated financial statements that are not included in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2003 and 2004 and the consolidated balance sheet data at March 31, 2004 are derived from
our unaudited consolidated financial statements included in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments that management considers necessary for the fair presentation of the
financial information set forth in those statements. The historical results are not necessarily indicative of the results to be expected in any future period.

Year Ended December 31,

Three MonthsEnded March 31,

1999

2000

2001

2002

2003

2003

2004

(in thousands, except per share data)

(unaudited)

Consolidated Statements of Operations Data:

Net revenues

$

220

$

19,108

$

86,426

$

347,848

$

961,874

$

178,894

$

389,638

Costs and expenses:

Cost of revenues

908

6,081

14,228

39,850

121,794

17,471

53,413

Research and development

2,930

10,516

16,500

31,748

91,228

12,505

35,019

Sales and marketing

1,677

10,385

20,076

43,849

120,328

17,767

47,904

General and administrative

1,221

4,357

12,275

24,300

56,699

10,027

21,506

Stock-based compensation(1)



2,506

12,383

21,635

229,361

36,418

76,473

Total costs and expenses

6,736

33,845

75,462

161,382

619,410

94,188

234,315

Income (loss) from operations

(6,516

)

(14,737

)

10,964

186,466

342,464

84,706

155,323

Interest income (expense) and other, net

440

47

(896

)

(1,551

)

4,190

(47

)

300

Income (loss) before income taxes

(6,076

)

(14,690

)

10,068

184,915

346,654

84,659

155,623

Provision for income taxes





3,083

85,259

241,006

58,859

91,650

Net income (loss)

$

(6,076

)

$

(14,690

)

$

6,985

$

99,656

$

105,648

$

25,800

$

63,973

Net income (loss) per share(2):

Basic

$

(0.14

)

$

(0.22

)

$

0.07

$

0.86

$

0.77

$

0.20

$

0.42

Diluted

$

(0.14

)

$

(0.22

)

$

0.04

$

0.45

$

0.41

$

0.10

$

0.24

Number of shares used in per share calculations(2):

Basic

42,445

67,032

94,523

115,242

137,697

127,339

151,084

Diluted

42,445

67,032

186,776

220,633

256,638

248,687

264,183

(1) Stock-based compensation, consisting of amortization of deferred stock-based compensation and the value of options issued to non-employees for services rendered, is allocated as follows:

Year Ended December 31,

Three MonthsEnded March 31,

1999

2000

2001

2002

2003

2003

2004

(in thousands)

(unaudited)

Cost of revenues

$



$

167

$

876

$

1,065

$

8,557

$

1,452

$

5,076

Research and development



1,573

4,440

8,746

138,377

19,423

46,265

Sales and marketing



514

1,667

4,934

44,607

7,618

14,146

General and administrative



252

5,400

6,890

37,820

7,925

10,986

$



$

2,506

$

12,383

$

21,635

$

229,361

$

36,418

$

76,473

(2)

See Note 1 of Notes to Consolidated Financial Statements included in this prospectus for information regarding the computation of per share amounts.

The following discussion and analysis of the financial condition and
results of our operations should be read in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current
expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled
Risk Factors and elsewhere in this prospectus.

Overview

Google is a global technology leader focused on improving
the ways people connect with information. Our innovations in web search and advertising have made our web site a top Internet destination and our brand one of the most recognized in the world. Our mission is to organize the worlds information
and make it universally accessible and useful. We serve three primary constituencies:



Users. We provide users with products and services that enable people to more quickly and easily find, create and organize information that is useful
to them.



Advertisers. We provide advertisers our Google AdWords program, an auction-based advertising program that enables them to deliver relevant ads targeted
to search results or web content. Our AdWords program provides advertisers with a cost-effective way to deliver ads to customers across Google sites and through the Google Network under our AdSense program.



Web sites. We provide members of our Google Network our Google AdSense program, which allows these members to deliver AdWords ads that are relevant to
the search results or content on their web sites. We share most of the fees these ads generate with our Google Network memberscreating an important revenue stream for them.

We were incorporated in California in September 1998 and reincorporated in
Delaware in August 2003. We began licensing our WebSearch product in the first quarter of 1999. We became profitable in 2001 following the launch of our Google AdWords program.

How We Generate Revenue

We derive most of our net revenues from fees we receive from our advertisers.

Our original business model consisted of licensing our search engine services to other web sites. In the first quarter of
2000, we introduced our first advertising program. Through our direct sales force we offered advertisers the ability to place text-based ads on our web sites targeted to our users search queries under a program called Premium Sponsorships.
Advertisers paid us based on the number of times their ads were displayed on users search results pages, and we recognized revenue at the time these ads appeared. In the fourth quarter of 2000, we launched Google AdWords, an online
self-service program that enables advertisers to place targeted text-based ads on our web sites. AdWords customers originally paid us based on the number of times their ads appeared on users search results pages. In the first quarter of 2002,
we began offering AdWords exclusively on a cost-per-click basis, so that an advertiser pays us only when a user clicks on one of its ads. AdWords is also available through our direct sales force. Our AdWords agreements are generally terminable at
any time by our advertisers. We recognize as revenue the fees charged advertisers each time a user clicks on one of the text-based ads that appear next to the search results on our web sites.

Effective January 1, 2004, we terminated the Premium Sponsorships program
and now offer a single pricing structure to all of our advertisers based on the AdWords cost-per-click model. We do not expect that this change to one pricing structure will have a negative effect on our revenues because most of our advertisers
switched to the AdWords cost-per-click model. Our AdWords cost-per-click program is the advertising program through which we generate net revenues by serving ads on our web sites and on Google Network member web sites through our AdSense program.

Google AdSense is the program through which we distribute our advertisers AdWords ads for
display on the web sites of our Google Network members. Our AdSense program includes AdSense for search and AdSense for content. AdSense for search, launched in the first quarter of 2002, is our service for distributing relevant ads from our
advertisers for display with search results on our Google Network members sites. AdSense for content, launched in the first quarter of 2003, is our service for distributing ads from our advertisers that are relevant to content on our Google
Network members sites. Our advertisers pay us a fee each time a user clicks on one of our advertisers ads displayed on Google Network members web sites. In the past, we have paid most of these advertiser fees to the members of the
Google Network, and we expect to continue doing so for the foreseeable future. We recognize these fees, net of the portion we pay our Google Network members, as revenue. In some cases, we guarantee our Google Network members minimum revenue share
payments. Members of the Google Network do not pay any fees associated with the use of our AdSense program on their web sites. Some of our Google Network members separately license our web search technology and pay related licensing fees to us. Our
agreements with Google Network members consist largely of uniform online click-wrap agreements that members enter into by interacting with our registration web sites. Agreements with our larger members are individually negotiated. The
standard agreements have no stated term and are terminable at will. The negotiated agreements vary in duration. The standard agreements have uniform revenue share terms. The negotiated agreements vary as to revenue share terms and are heavily
negotiated.

We believe the factors that influence the
success of our advertising programs include the following:



The relevance, objectivity and quality of our search results.



The number of searches initiated at our web sites or our Google Network members web sites.



The relevance and quality of advertisements displayed with search results on our web sites and of Google Network members web sites, or with the content on our Google Network
members web sites.



The total number of advertisements displayed on our web sites and on web sites of Google Network members.



The rate at which people click on advertisements.



The number of advertisers.



The total and per click advertising spending budgets of an advertiser.



Our minimum fee per click, which is currently $0.05.



The advertisers return on investment from advertising campaigns on our web sites or on the web sites of our Google Network members compared to other forms of advertising.

Advertising revenues made up 77%, 92%, 95% and
96% of our net revenues in 2001, 2002, 2003 and in the three months ended March 31, 2004. We derive the balance of our net revenues from the license of our web search technology, the license of our search solutions to enterprises and the sale and
license of other products and services.

Trends in Our Business

Our business has grown rapidly since inception, and we
anticipate that our business will continue to grow. This growth has been characterized by substantially increased net revenues. However, our net revenue growth rate has declined, and we expect that it will continue to decline as a result of
anticipated changes to our advertising program revenue mix, increasing competition and the inevitable decline in growth rates as our net revenues increase to higher levels. In addition, steps we take to improve the relevance of the ads displayed,
such as removing ads that generate low click-through rates, could negatively affect our near-term advertising revenues.

Although our operating margin was greater in the three months ended March 31, 2004 compared to the
year ended December 31, 2003, we believe that our operating margin will decline in 2004 compared to 2003. We believe the decrease in operating margin will result from an increased portion of our net revenues being generated through our AdSense
program, and from an anticipated increase in costs and expenses, other than stock-based compensation, as a percentage of net revenues in 2004 compared to 2003. This expected increase in the portion of our net revenues generated through our AdSense
program is a result of an anticipated increase in the portion of ad clicks that occur on Google Network member web sites compared to our Google web sites, as we increase the number of Google Network members. In other words, net revenues earned
through our Google Network members under our relatively newer Google AdSense program are growing more rapidly than those earned through our Google web sites. The operating margin we realize on revenues generated from the web sites of our Google
Network members through our AdSense program is significantly lower than that generated from paid clicks on our web sites. This lower operating margin arises because most of the advertiser fees from our AdSense agreements are shared with our Google
Network members, leaving only a portion of these fees for us. The lower operating margin also results from the higher costs attributable to the additional sales and information systems infrastructure required to secure and manage our Google Network.
The expected increase in costs and expenses, other than stock-based compensation, as a percentage of net revenues is primarily a result of building the necessary employee and systems infrastructures required to manage the anticipated growth of our
company. This anticipated decline to our operating margin is expected to be partially offset by a decrease in stock-based compensation as a percentage of net revenues in 2004 compared to 2003.

We have a large and diverse base of advertisers and Google Network members.
No advertiser generated more than 3% of our net revenues in either 2001, 2002, 2003 or in the three months ended March 31, 2004. In addition, no Google Network member accounted for more than 5% of our net revenues in 2002, 2003 or in the three
months ended March 31, 2004. We expect our base of advertisers and Google Network members to remain large and diverse for the foreseeable future.

We have experienced and expect to continue to experience substantial growth in our operations as we seek to expand our user, advertiser and Google Network
members bases and continue to expand our presence in international markets. This growth has required the continued expansion of our human resources and substantial investments in property and equipment. Our full-time employee headcount has grown
from 284 at December 31, 2001, to 682 at December 31, 2002, to 1,628 at December 31, 2003 and to 1,907 at March 31, 2004. In addition, we have employed a significant number of temporary employees in the past and expect to continue to do so in the
foreseeable future. Our capital expenditures have grown from $13.1 million in 2001, to $37.2 million in 2002, to $176.8 million in 2003 and to $86.0 million in the three months ended March 31, 2004. We currently expect to spend at least $250 million
on capital equipment, including information technology infrastructure, to manage our operations during 2004. In addition, we anticipate that the growth rate of our costs and expenses, other than stock-based compensation, may exceed the growth rate
of our net revenues during 2004. Management of this growth will continue to require the devotion of significant employee and other resources. We may not be able to manage this growth effectively.

In early 2003, we decided to invest significant resources to begin the
process of comprehensively documenting and analyzing our system of internal controls. We have identified areas of our internal controls requiring improvement, and we are in the process of designing enhanced processes and controls to address any
issues identified through this review. Areas for improvement include streamlining our domestic and international billing processes, further limiting internal access to certain data systems and continuing to improve coordination across business
functions. During our 2002 audit, our external auditors brought to our attention a need to increase restrictions on employee access to our advertising system and automate more of our financial processes. The auditors identified these issues together
as a reportable condition, which means that these were matters that in the auditors judgment could adversely affect our ability to record, process, summarize and report financial data consistent with the assertions of management in
our financial statements. In 2003, we devoted significant resources to remediate and improve our internal controls. Although we believe that these efforts have strengthened our internal controls and addressed the concerns that gave rise to the
reportable condition in 2002, we are continuing to work to improve our internal controls, including in the areas of access and security. We plan

to continue to invest the resources necessary to ensure the effectiveness of our internal controls and procedures, including in the areas of access and
security.

The portion of our net revenues derived from
international markets has increased. Our international revenues have grown as a percentage of our total net revenues from 23% in 2002 to 29% in 2003, and have grown from 27% in the three months ended March 31, 2003 to 32% in the three months ended
March 31, 2004. This increase in the portion of our net revenues derived from international markets results largely from increased acceptance of our advertising programs in international markets, an increase in our direct sales resources in
international markets and services as well as customer support operations and our continued progress in developing versions of our products tailored for these markets.

Results of Operations

The following is a more detailed discussion of our financial condition and results of operations for the periods presented.

The following table presents our historical operating results as a percentage
of net revenues for the periods indicated:

The following table presents our net revenues, by revenue source, and the period over period percentage change, for the periods presented:

Year Ended December 31,

Three Months Ended

2001

2002

2003

March 31,2003

December 31,2003

March 31,2004

(unaudited)

(dollars in thousands)

Advertising revenues:

Google web sites

$

66,932

$

306,977

$

772,192

$

154,108

$

233,968

$

293,053

Google Network web sites



12,278

144,411

15,287

61,030

82,246

Total advertising revenues

66,932

319,255

916,603

169,395

294,998

375,299

Licensing and other revenues

19,494

28,593

45,271

9,499

12,999

14,339

Net revenues

$

86,426

$

347,848

$

961,874

$

178,894

$

307,997

$

389,638

The
following table presents our net revenues, by revenue source, as a percentage of total net revenues for the periods presented:

Year EndedDecember 31,

Three Months Ended

March 31,

2003

December 31,

2003

March 31,

2004

2001

2002

2003

(unaudited)

Advertising revenues:

Google web sites

77

%

88

%

80

%

86

%

76

%

75

%

Google Network web sites



4

15

9

20

21

Total advertising revenues

77

92

95

95

96

96

Google web sites as % of advertising revenues

100

96

84

91

79

78

Google Network web sites as % of advertising revenues



4

16

9

21

22

Licensing and other revenues

23

%

8

%

5

%

5

%

4

%

4

%

Growth in our
net revenues from 2002 to 2003, and from the three months ended March 31, 2003 and December 31, 2003 to the three months ended March 31, 2004, resulted primarily from growth in advertising revenues from ads on our web sites and, to a lesser
extent, growth in revenues from ads on our Google Network members web sites. The advertising revenue growth resulted primarily from increases in the total number of paid clicks and advertisements displayed through our programs, rather than
from changes in the fees charged. Net revenue growth was driven to a lesser extent by our introduction late in the first quarter of 2003 of AdSense for content.

Growth in our net revenues from 2001 to 2002 resulted primarily from growth in advertising revenues from ads on our web
sites. The growth in advertising revenues resulted primarily from increases in the total number of paid clicks under our cost-per-click programs and the total number of advertisements displayed through our cost-per-displayed ad programs, rather than
from changes in the fees charged. The revenue growth was driven in part by our introduction of our cost-per-click revenue model in the early part of 2002, which contributed to a significant increase in the number of our advertisers, and to a lesser
extent, by our introduction of AdSense for search in the first quarter of 2002.

We believe the increases in net revenues described above were the result of the relevance and quality of both the search results and advertisements displayed, which resulted in more searches, advertisers and Google
Network members, and ultimately more paid clicks.

Domestic and international net revenues as a percentage of consolidated net revenues, determined based on the billing addresses of our advertisers, are
set forth below.

Year EndedDecember 31,

Three Months Ended

March 31,

2003

December 31,

2003

March 31,

2004

2001

2002

2003

(unaudited)

United States

82

%

77

%

71

%

73

%

70

%

68

%

International

18

%

23

%

29

%

27

%

30

%

32

%

The growth in
international net revenues is the result of our efforts to provide search results to international users and deliver more ads from non-U.S. advertisers. We expect that international net revenues will continue to grow as a percentage of our total net
revenues during 2004 and in future periods. While international revenues accounted for approximately 29% of our total net revenues in 2003 and 32% in the three months ended March 31, 2004, more than half of our user traffic came from outside
the U.S. See Note 12 of Notes to Consolidated Financial Statements included as part of this prospectus for additional information about geographic areas.

Costs and Expenses

Cost of Revenues. Cost of revenues consists primarily of the expenses associated with the operation of our data centers,
including depreciation, labor, energy and bandwidth costs. Cost of revenues also includes credit card and other transaction fees related to processing customer transactions. Typically, in situations where we pay a Google Network member more than the
revenue we receive from our advertisers in connection with paid clicks on that Google Network members web site, we recognize the difference as cost of revenues. Due to intense competition for Google Network members and our limited ability to
accurately forecast the number of paid clicks that will result, we expect that we will enter into AdSense agreements from time to time under which we will make payments to the Google Network member exceeding the revenue we recognize from the
agreement. Cost of revenues also includes amortization of expenses related to purchased and licensed technologies.

Cost of revenues increased by $6.7 million to $53.4 million (or 13.7% of net revenues) in the three months ended March 31, 2004, from $46.7 million (or
15.1% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily the result of depreciation of additional information technology assets purchased in the current and prior periods and additional data
center costs required to manage more Internet traffic, advertising transactions and new products and services. There was an increase in data center costs of $7.7 million primarily resulting from the depreciation of additional information
technology assets purchased in the current and prior periods. In addition, there was an increase in credit card and other transaction processing fees of $2.1 million resulting from more advertiser fees generated through AdWords. The dollar increase
in cost of revenues was partially offset by a decrease in cost of revenues of $3.2 million related to AdSense agreements under which we paid Google Network members more than the fees we received from our advertisers in connection with paid clicks on
those members web sites.

Cost of revenues
increased by $35.9 million to $53.4 million (or 13.7% of net revenues) in the three months ended March 31, 2004, from $17.5 million (or 9.8% of net revenues) in the three months ended March 31, 2003. This increase was primarily the result of
depreciation of additional information technology assets purchased in the current and prior periods and additional data center costs required to manage more Internet traffic, advertising transactions and new products and services. There was an
increase in data center costs of $18.1 million primarily resulting from the depreciation of additional information technology assets purchased in the current and prior periods. In addition, there was an increase in credit card and other transaction
processing fees of $6.8 million resulting from more advertiser fees generated through AdWords. The increase in cost of revenues was also driven by an increase of $8.6 million related to AdSense agreements under which we paid Google Network
members more than the fees we received from our advertisers in connection with paid clicks on those members web sites.

In addition, there was an increase in cost of revenues of $1.5 million related to amortization of developed technology resulting from acquisitions in
2003.

Cost of revenues increased by $81.9 million to $121.8
million (or 12.7% of net revenues) in 2003, from $39.9 million (or 11.5% of net revenues) in 2002. This increase was primarily the result of additional data center costs required to manage more Internet traffic, advertising transactions and new
products and services. There was an increase in data center costs of $39.9 million primarily resulting from depreciation of additional information technology assets purchased in current and prior periods. In addition, there was an increase in credit
card and other transaction processing fees of $15.7 million. The increase in cost of revenues was also driven by an increase of $19.7 million related to AdSense agreements under which we paid Google Network members more than the fees we
received from our advertisers in connection with paid clicks on those Google Network members web sites. In addition, there was an increase in cost of revenues of $4.9 million related to amortization of developed technology resulting from
acquisitions in 2003. The increase in cost of revenues as a percentage of net revenues was primarily the result of payments to Google Network members that exceeded advertising fees received from advertisers and amortization of developed technology.

Cost of revenues increased by $25.6 million to $39.9
million (or 11.5% of net revenues) in 2002, from $14.2 million (or 16.5% of net revenues) in 2001. This increase in dollars was primarily the result of additional data center costs required to manage more Internet traffic, advertising
transactions and new products and services. There was an increase in data center costs of $15.3 million primarily resulting from depreciation of additional information technology assets purchased in current and prior periods. In addition, there was
an increase in credit card and other transactional processing fees of $6.7 million. Also, $2.8 million of cost of revenues was recognized during 2002 related to an AdSense agreement under which the value of the consideration we provided a
Google Network member was more than the fees we received from our advertisers in connection with paid clicks on that Google Network members web site.

We expect cost of revenues to increase in dollars and as a percentage of net revenues during 2004 primarily as a result of forecasted increases in
our data center costs required to manage increased traffic, advertising transactions and new products and services. Also, increasing competition for arrangements with web sites that are potential Google Network members could result in our entering
into more AdSense agreements under which guaranteed payments to Google Network members exceed the fees we receive from advertisers.

Research and Development. Research and development expenses consist primarily of compensation and related costs for
personnel responsible for the research and development of new products and services, as well as significant improvements to existing products and services. We expense research and development costs as they are incurred.

Research and development expenses increased by $6.5 million to $35.0 million
(or 9.0% of net revenues) in the three months ended March 31, 2004, from $28.5 million (or 9.2% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase in labor and facilities
related costs of $4.8 million as a result of a 22% increase in research and development headcount.

Research and development expenses increased by $22.5 million to $35.0 million (or 9.0% of net revenues) in the three months ended March 31, 2004, from
$12.5 million (or 7.0% of net revenues) in the three months ended March 31, 2003. This increase was primarily due to an increase in labor and facilities related costs of $15.9 million as a result of a 123% increase in research and development
headcount.

Research and development expenses increased by
$59.5 million to $91.2 million (or 9.5% of net revenues) in 2003, from $31.7 million (or 9.1% of net revenues) in 2002. This increase was primarily due to an increase in labor and facilities related costs of $34.3 million as a result of a 101%
increase in research and development headcount. In addition, we recognized $11.6 million of in-process research and development expenses during 2003 as a result of an acquisition. Note 4 of Notes to Consolidated Financial Statements included as part
of this prospectus describes further purchased in-process research and development expenses and other acquisitions.

Research and development expenses increased by $15.2 million to $31.7 million (or 9.1% of net revenues)
in 2002, from $16.5 million (or 19.1% of net revenues) in 2001. This increase was primarily due to an increase in labor and facilities related costs of $13.2 million, principally as a result of an 83% increase in research and development headcount.

We anticipate that research and development expenses will
increase in dollar amount and may increase as a percentage of net revenues in 2004 and future periods because we expect to hire more research and development personnel and build the infrastructure required to support the development of new, and
improve existing, products and services.

Sales and
Marketing. Sales and marketing expenses consist primarily of compensation and related costs for personnel engaged in customer service and sales and sales support functions, as well as advertising and promotional
expenditures.

Sales and marketing expenses increased $6.7
million to $47.9 million (or 12.3% of net revenues) in the three months ended March 31, 2004, from $41.2 million (or 13.4% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase
in labor and facilities related costs of $4.9 million mostly as a result of a 14% increase in sales and marketing headcount. The increase in sales and marketing personnel was a result of our on-going efforts to secure new, and to provide
support to our existing, advertisers and Google Network members, on a worldwide basis.

Sales and marketing expenses increased $30.1 million to $47.9 million (or 12.3% of net revenues) in the three months ended March 31, 2004, from $17.8 million (or 9.9% of net revenues) in the three months ended
March 31, 2003. This increase was primarily due to an increase in labor and facilities related costs of $20.8 million mostly as a result of a 114% increase in sales and marketing headcount. In addition, advertising and promotional expenses
increased $4.5 million and travel-related expenses increased $1.0 million. The increase in sales and marketing personnel and advertising, promotional and travel-related expenses was a result of our on-going efforts to secure new, and to provide
support to our existing, advertisers and Google Network members, on a worldwide basis.

Sales and marketing expenses increased $76.5 million to $120.3 million (or 12.5% of net revenues) in 2003, from $43.8 million (or 12.6% of net revenues) in 2002. This increase in dollars was primarily due to an
increase in labor and facilities related costs of $54.4 million mostly as a result of a 149% increase in sales and marketing headcount. In addition, advertising and promotional expenses increased $12.9 million and travel related expenses increased
$3.2 million, primarily in the second half of 2003. The increase in sales and marketing personnel and advertising, promotional and travel-related expenses was a result of our on-going efforts to secure new, and to provide support to our existing,
advertisers and Google Network members, on a worldwide basis. For instance, we have hired personnel to help our advertisers maximize their return on investment through the selection of appropriate keywords and have promoted the distribution of the
Google Toolbar to Internet users in order to make our search services easier to access.

Sales and marketing expenses increased $23.7 million to $43.8 million (or 12.6% of net revenues) in 2002, from $20.1 million (or 23.2% of net revenues) in
2001. This increase in dollars was primarily due to increases in labor and facilities related costs of $19.5 million, primarily as a result of a 202% increase in headcount. Also, advertising and promotional expenses increased $1.7 million and travel
related expenses increased $1.3 million.

We
anticipate sales and marketing expenses will increase in dollar amount and may increase as a percentage of net revenues in 2004 and future periods as we continue to expand our business on a worldwide basis. A significant portion of these increases
relate to our plan to add support personnel to increase the level of service we provide to our advertisers and Google Network members.

General and Administrative. General and administrative expenses consist primarily of compensation and related costs for
personnel and facilities related to our finance, human resources, facilities, information

technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit and
information technology consulting. To date, we have not experienced any significant amount of bad debts.

General and administrative expenses increased $1.2 million to $21.5 million (or 5.5% of net revenues) in the three months ended March 31, 2004, from $20.3
million (or 6.6% of net revenues) in the three months ended December 31, 2003. This increase in dollars was primarily due to an increase in labor and facilities related costs of $2.0 million, primarily as a result of a 20% increase in
headcount, and an increase in professional services fees of $600,000. The additional personnel and professional services fees are the result of the growth of our business. These costs were partially offset by a decrease in bad debt expense of
$1.0 million.

General and administrative
expenses increased $11.5 million to $21.5 million (or 5.5% of net revenues) in the three months ended March 31, 2004, from $10.0 million (or 5.6% of net revenues) in the three months ended March 31, 2003. This increase in dollars was primarily due
to an increase in labor and facilities related costs of $6.3 million, primarily as a result of a 102% increase in headcount, and an increase in professional services fees of $3.0 million. The additional personnel and professional services fees
are the result of the growth of our business.

General
and administrative expenses increased $32.4 million to $56.7 million (or 5.9% of net revenues) in 2003, from $24.3 million (or 7.0% of net revenues) in 2002. This increase in dollars was primarily due to an increase in labor and facilities related
costs of $16.7 million, primarily as a result of a 194% increase in headcount, and an increase in professional services fees of $10.0 million, primarily in the second half of 2003. The additional personnel and professional services fees are the
result of the growth of our business.

General and
administrative expenses increased $12.0 million to $24.3 million (or 7.0% of net revenues) in 2002, from $12.3 million (or 14.2% of net revenues) in 2001. This increase in dollars was primarily due to an increase in labor and facilities related
costs of $7.8 million, mostly as a result of a 96% increase in headcount and an increase in professional services fees of $3.9 million. The additional personnel and professional services fees are the result of the growth of our business.

As we expand our business and incur additional expenses associated
with being a public company, we believe general and administrative expenses will increase in dollar amount and may increase as a percentage of net revenues in 2004 and in future periods.

Stock-Based Compensation. We have granted to our employees options to purchase our common
stock at exercise prices equal to the fair market value of the underlying stock, as determined by our board of directors, on the date of option grant. For purposes of financial accounting, we have applied hindsight within each year to arrive at
deemed values for the shares underlying our options. We recorded the difference between the exercise price of an option awarded to an employee and the deemed value of the underlying shares on the date of grant as deferred stock-based compensation.
The determination of the deemed value of stock underlying options is discussed in detail below in Critical Accounting Policies and EstimatesStock-Based Compensation. We recognize compensation expense as we amortize the deferred
stock-based compensation amounts on an accelerated basis over the related vesting periods, generally four or five years. In addition, we have awarded options to non-employees to purchase our common stock. Stock-based compensation related to
non-employees is measured on a fair-value basis using the Black-Scholes valuation model as the options are earned.

Stock-based compensation in the three months ended March 31, 2004 decreased $8.5 million to $76.5 million (or 19.6% of net revenues) from $85.0
million (or 27.6% of net revenues) in the three months ended December 31, 2003. The decrease was primarily due to a decrease of $7.0 million of stock-based compensation related to the modification of terms of former employees stock option
agreements and a decrease in the level of stock option grants in the three months ended March 31, 2004. This decrease was partially offset by the larger differences between the exercise prices and the deemed values of the underlying stock on the
dates of grant.

Stock-based compensation in the three months ended March 31, 2004 increased $40.1 million to
$76.5 million (or 19.6% of net revenues) from $36.4 million (or 20.4% of net revenues) in the three months ended March 31, 2003. The increase in dollars was primarily driven by the larger differences between the exercise prices and the deemed
values of the underlying common stock on the dates of grant, partially offset by a decrease in the level of stock option grants in recent periods. The increase was also driven by the recognition of $3.9 million of stock-based compensation related to
the modification of terms of former employees stock option agreements in the three months ended March 31, 2004. No such modifications were made in the three months ended March 31, 2003.

Stock-based compensation increased $207.8 million to $229.4 million (or
23.8% of net revenues) in 2003 from $21.6 million (or 6.2% of net revenues) in 2002. The increase was primarily driven by the the larger differences between the exercise prices and the deemed values of the underlying common stock on the dates of
grant and, to a lesser extent, an increase in the level of stock option grants in 2003. Stock-based compensation increased $9.2 million to $21.6 million (or 6.2% of net revenues) in 2002 from $12.4 million (or 14.3% of net revenues) in 2001. The
increase in dollars was primarily driven by the larger differences between the exercise prices and the deemed values of the underlying common stock on the dates of grant, partially offset by a decrease in the level of stock option grants in 2002.

We expect stock-based compensation to be $168.2
million for the remaining nine months of 2004, $116.8 million in 2005, $57.6 million in 2006, $20.1 million in 2007, $4.3 million in 2008 and $1.6 million thereafter, related to the deferred stock-based compensation on the balance sheet at
March 31, 2004. These amounts do not include stock-based compensation related to options granted to non-employees and any options granted to employees and directors subsequent to March 31, 2004 at exercise prices less than the deemed value on the
date of grant and any additional compensation expense that may be required as a result of any changes in the stock option accounting rules. These amounts also assume the continued employment throughout the referenced periods of the recipient of the
options that gave rise to the deferred stock-based compensation.

At December 31, 2003, there were 500,150 unvested options held by non-employees with a weighted average exercise price of $0.69, a weighted average 48-month remaining vesting period and a weighted average 4-year
remaining expected life. The options generally vest on a monthly and ratable basis subsequent to December 31, 2003. Depending on the fair market value of these options on their vesting dates, which will depend in significant part on the then current
trading price of our Class A common stock, the related charge could be significant during 2004 and subsequent periods. We recognized $2.7 million of stock-based compensation related to these options that vest over time in the three months ended
March 31, 2004. No options that vest over time were granted to non-employees in the three months ended March 31, 2004.

Interest Income (Expense) and Other, Net

Interest income (expense) and other of $300,000 in the three months ended March 31, 2004 was primarily the result of $1.2 million of interest income and
realized gains earned on cash, cash equivalents and short-term investments balances, partially offset by $700,000 of foreign exchange losses from net receivables denominated in currencies other than U.S. dollars as a result of generally weakening
foreign currencies against the U.S. dollar during the three months ended March 31, 2004, and approximately $300,000 of interest expense incurred on equipment leases, including the amortization of the fair value of warrants issued to lenders in prior
years.

Interest income (expense) and other netted to
approximately zero in the three months ended March 31, 2003 as a result of approximately $500,000 of interest income earned on cash, cash equivalents and short-term investments balances offset by approximately $500,000 of interest expense incurred
on equipment loans and leases, including the amortization of the fair value of warrants issued to lenders in prior years.

Interest income (expense) and other of $4.2 million in 2003 was primarily the result of $2.7 million of interest income earned on cash, cash equivalents
and short-term investments balances, and $2.1 million of net foreign exchange gains from net receivables denominated in currencies other than U.S. dollars as a result of

generally strengthening foreign currencies against the U.S. dollar throughout 2003. In addition, we recognized $1.4 million of other income in 2003,
primarily related to a gain recorded for certain upfront fees paid by advertisers whose ads were not delivered during the related contract periods. These income sources were partially offset by $1.9 million of interest expense incurred on equipment
loans and leases, including the amortization of the fair value of warrants issued to lenders in prior years.

Interest income (expense) and other of $(900,000) and $(1.6) million in 2001 and 2002 was primarily the result of interest expense incurred on equipment
loans and leases, including the amortization of the fair value of warrants issued to lenders, partially offset by interest income on cash, cash equivalents and short-term investments balances.

Provision for Income Taxes

Our provision for income taxes increased to $91.7 million or an
effective tax rate of 59% in the three months ended March 31, 2004, from $58.9 million or an effective tax rate of 70% in the three months ended March 31, 2003 and $62.2 million or an effective tax rate of 70% in the three months ended December
31, 2003. Our provision for income taxes increased to $241.0 million or an effective tax rate of 70% during 2003, from $85.3 million or an effective tax rate of 46% during 2002, and from $3.1 million or an effective tax rate of 31% during 2001. The
increases in provision for income taxes primarily resulted from increases in Federal and state income taxes, driven by higher taxable income year over year. Our effective tax rate is our provision for income taxes expressed as a percentage of our
income before income taxes. Our effective tax rate is higher than the statutory rate because, in arriving at income before income taxes, we include in our costs and expenses significant non-cash expenses related to stock-based compensation, which
are recognized for financial reporting purposes, but are not deductible for income tax purposes. The increases in our effective tax rates over each of 2001, 2002 and 2003 were primarily the result of an increase in stock-based compensation amounts.

We expect our effective tax rate to decrease in 2004,
primarily as a result of an expected decrease in stock-based compensation charges as a percentage of pre-tax income in 2004 compared to 2003. Furthermore, once there is a public market for our stock, we may reduce our tax provision based on benefits
we may realize upon exercise of certain options outstanding. Any such reduction would lower our effective tax rate.

A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in Note 11 of Notes to Consolidated Financial Statements
included in this prospectus.

You should read the following tables presenting our quarterly results of operations in conjunction with the consolidated
financial statements and related notes contained elsewhere in this prospectus. We have prepared the unaudited information on the same basis as our audited consolidated financial statements. You should also keep in mind, as you read the following
tables, that our operating results for any quarter are not necessarily indicative of results for any future quarters or for a full year.

The following table presents our unaudited quarterly results of operations for the nine quarters ended March 31, 2004. This table includes all
adjustments, consisting only of normal recurring adjustments, that we consider necessary for fair presentation of our financial position and operating results for the quarters presented. We believe that we experience increased levels of Internet
traffic focused on commercial transactions in the fourth quarter and decreased levels of Internet traffic in the summer months. To date, these seasonal trends have been masked by the substantial quarter over quarter growth in our net revenues.

Quarter Ended

Mar 31,2002

Jun 30,2002

Sep 30,2002

Dec 31,2002

Mar 31,2003

Jun 30,2003

Sep 30,2003

Dec 31,2003

Mar 31,2004

(in thousands, except per share amounts)

(unaudited)

Consolidated Statements of Income Data:

Net revenues

$

41,874

$

66,908

$

102,534

$

136,532

$

178,894

$

217,380

$

257,603

$

307,997

$

389,638

Costs and expenses:

Cost of revenues

5,281

8,790

11,369

14,410

17,471

23,582

34,051

46,690

53,413

Research and development(1)

6,183

6,457

9,053

10,055

12,505

17,492

32,774

28,457

35,019

Sales and marketing

7,294

11,176

11,704

13,675

17,767

24,822

36,575

41,164

47,904

General and administrative

4,135

5,653

7,313

7,199

10,027

12,535

13,853

20,284

21,506

Stock-based compensation(2)

3,774

3,735

6,182

7,944

36,418

34,165

73,794

84,984

76,473

Total costs and expenses

26,667

35,811

45,621

53,283

94,188

112,596

191,047

221,579

234,315

Income from operations

15,207

31,097

56,913

83,249

84,706

104,784

66,556

86,418

155,323

Interest income, expense and other, net

(501

)

(310

)

(677

)

(63

)

(47

)

766

464

3,007

300

Income before income taxes

14,706

30,787

56,236

83,186

84,659

105,550

67,020

89,425

155,623

Provision for income taxes

6,780

14,194

25,929

38,356

58,859

73,382

46,594

62,171

91,650

Net income

$

7,926

$

16,593

$

30,307

$

44,830

$

25,800

$

32,168

$

20,426

$

27,254

$

63,973

Net income per share:

Basic

$

0.07

$

0.15

$

0.26

$

0.37

$

0.20

$

0.24

$

0.14

$

0.19

$

0.42

Diluted

$

0.04

$

0.08

$

0.13

$

0.19

$

0.10

$

0.12

$

0.08

$

0.10

$

0.24

(1)

The results for the quarter ended September 30, 2003 includes $11.6 million of in-process research and development expense related to an acquisition.

(2)

Stock-based compensation, consisting of amortization of deferred stock-based compensation and the fair value of options issued to non-employees for services rendered, is allocated
in the table that follows. Stock-based compensation in any quarter is affected by the number of grants in the current and prior quarters, and the difference between the fair market values as determined by the board of directors on the date of grant
and the deemed values used for financial accounting purposes. The use of the accelerated basis of amortization results in significantly greater stock-based compensation in the first year of vesting compared to subsequent years.

The following table presents our unaudited quarterly results of operations as a percentage of net
revenues for the nine quarters ended March 31, 2004.

Quarter Ended

Mar 31,2002

Jun 30,2002

Sep 30,2002

Dec 31,2002

Mar 31,2003

Jun 30,2003

Sep 30,2003

Dec 31,2003

Mar 31,2004

As Percentage of Net Revenues:

Net revenues

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Costs and expenses:

Cost of revenues

12.6

13.1

11.1

10.6

9.8

10.9

13.2

15.1

13.7

Research and development(1)

14.8

9.7

8.8

7.4

7.0

8.0

12.7

9.2

9.0

Sales and marketing

17.4

16.7

11.4

10.0

9.9

11.4

14.2

13.4

12.3

General and administrative

9.9

8.4

7.1

5.3

5.6

5.8

5.4

6.6

5.5

Stock-based compensation(2)

9.0

5.6

6.0

5.8

20.4

15.7

28.7

27.6

19.6

Total costs and expenses

63.7

53.5

44.4

39.1

52.7

51.8

74.2

71.9

60.1

Income from operations

36.3

46.5

55.6

60.9

47.3

48.2

25.8

28.1

39.9

Interest income, expense and other, net

(1.2

)

(0.5

)

(0.7

)

(0.0

)

(0.0

)

0.4

0.2

1.0

0.0

Income before income taxes

35.1

46.0

54.9

60.9

47.3

48.6

26.0

29.1

39.9

Net income

18.9

%

24.8

%

29.6

%

32.8

%

14.4

%

14.8

%

7.9

%

8.9

%

16.4

%

(1)

The results for the quarter ended September 30, 2003 includes $11.6 million of in-process research and development expense related to an acquisition.

(2)

Stock-based compensation, consisting of amortization of deferred stock-based compensation and the fair value of options issued to non-employees for services rendered, is allocated
in the table that follows. Stock-based compensation in any quarter is affected by the number of grants in the current and prior quarters, and the difference between the fair market values as determined by the board of directors on the date of grant
and the deemed values used for financial accounting purposes. The use of the accelerated basis of amortization results in significantly greater stock-based compensation in the first year of vesting compared to subsequent years.

Quarter Ended

Mar 31,2002

Jun 30,2002

Sep 30,2002

Dec 31,2002

Mar 31,2003

Jun 30,2003

Sep 30,2003

Dec 31,2003

Mar 31,2004

Cost of revenues

0.3

%

0.2

%

0.3

%

0.3

%

0.8

%

0.6

%

1.2

%

0.9

%

1.3

%

Research and development

3.0

2.2

2.7

2.4

11.0

8.6

17.1

18.2

11.9

Sales and marketing

1.1

1.2

1.5

1.5

4.3

3.3

6.1

4.6

3.6

General and administrative

4.6

2.0

1.5

1.6

4.3

3.2

4.3

3.9

2.8

9.0

%

5.6

%

6.0

%

5.8

%

20.4

%

15.7

%

28.7

%

27.6

%

19.6

%

Liquidity and Capital
Resources

In summary, our cash flows were:

Year Ended December 31,

Three Months EndedMarch 31,

2001

2002

2003

2003

2004

(in thousands)

(unaudited)

Net cash provided by operating activities

$

31,089

$

155,265

$

395,445

$

113,198

$

208,045

Net cash used in investing activities

(29,091

)

(109,717

)

(313,954

)

(59,462

)

(106,843

)

Net cash provided by (used in) financing activities

(2,439

)

(5,473

)

8,090

3,351

3,710

Since
inception, we have financed our operations primarily through internally generated funds, private sales of preferred stock totaling $37.6 million and the use of our lines of credit with several financial institutions. At March 31, 2004, we had $454.9
million of cash, cash equivalents and short-term investments, compared to $334.7 million, $146.3 million and $33.6 million at December 31, 2003, 2002 and 2001, respectively. Cash equivalents and short-term investments are comprised of highly
liquid debt instruments of the U.S. government and its agencies and municipalities. Note 2 of Notes to Consolidated Financial Statements included as part of this prospectus describes further the composition of our short-term investments.

Our principal sources of liquidity are our cash, cash equivalents and short-term investments, as well
as the cash flow that we generate from our operations. At March 31, 2004 and December 31, 2003, we had unused letters of credit for approximately $14.0 million and $12.2 million. We believe that our existing cash, cash equivalents, short-term
investments and cash generated from operations will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months. Our liquidity could be negatively affected by a decrease in demand for our products and
services. In addition, we may make acquisitions or license products and technologies complementary to our business and may need to raise additional capital through future debt or equity financing to the extent necessary to fund any such acquisitions
and licensing activities. Additional financing may not be available at all or on terms favorable to us.

Cash provided by operating activities primarily consists of net income adjusted for certain non-cash items including depreciation, amortization,
stock-based compensation, and the effect of changes in working capital and other activities. Cash provided by operating activities in the three months ended March 31, 2004 was $208.0 million and consisted of net income of $64.0 million,
adjustments for non-cash items of $100.1 million and $43.9 million provided by working capital and other activities. Working capital and other activities primarily consisted of an increase in income tax liabilities, net, of $73.1 million accrued
prior to April income tax payments, partially offset by an increase of $24.8 million in accounts receivable due to the growth in fees billed our advertisers. Cash provided by operating activities in the three months ended March 31, 2003 was
$113.2 million and consisted of net income of $25.8 million, adjustments for non-cash items of $47.1 million and $40.3 million provided by working capital and other activities. Working capital and other activities primarily consisted
of an increase in income tax liabilities, net, of $34.8 million accrued prior to April tax payments, and an increase of $20.0 million in accrued revenue share due to the growth in our AdSense programs and the timing of payments made to our Google
Network members, partially offset by an increase of $17.8 million in accounts receivable due to the growth in fees billed our advertisers. Cash provided by operating activities in 2003 was $395.4 million and consisted of net income of $105.6
million, adjustments for non-cash items of $296.0 million and $6.2 million used by working capital and other activities. Working capital and other activities primarily consisted of an increase of $90.4 million in accounts receivable due to the
growth in fees billed our advertisers and an increase of $58.9 million in prepaid revenue share, expenses and other assets, due primarily to an increase of $35.5 million related to prepaid revenue share, as a result of several significant
prepayments made in the fourth quarter of 2003, as well as increase of $11.0 million of restricted cash. This was partially offset by an increase of $74.6 million in accrued revenue share due to the growth in our AdSense programs and the timing
of payments made to our Google Network members and an increase of $31.1 million in accrued expenses and other liabilities primarily due to an increase in annual bonuses as a result of the growth in the number of employees. These bonuses were paid in
the first quarter of 2004. Cash provided by operating activities in 2002 was $155.3 million and consisted of net income of $99.7 million, adjustments for non-cash items of $50.6 million and $5.0 million provided by working capital and other
activities. Cash provided by operating activities in 2001 was $31.1 million and consisted of net income of $7.0 million, adjustments for non-cash items of $26.6 million and $2.5 million used by working capital and other activities. As a result of a
third party exercising a warrant to purchase 7,437,452 shares of Class B common stock in May 2004, we expect to realize a significant reduction in our tax liability in 2004. Furthermore, as warrants to purchase an additional 2,096,140 shares of
Class B common stock, and as certain options to purchase additional shares of Class A and Class B common stock, are exercised as anticipated over the current and future years, we expect to realize additional and significant reductions in our tax
liabilities. The reduction in our tax liability is computed based on the applicable statutory rates and the difference between the fair market value of our stock on the date of exercise, as determined by our board of directors, and the price paid
for those shares. Also, as we expand our business internationally, we may offer payment terms to certain advertisers that are standard in their locales, but longer than terms we would generally offer to our domestic advertisers. This may increase
our working capital requirements and may have a negative effect on cash flow provided by our operating activities. In addition, we expect that, once we are a public company, our cash-based compensation per employee will likely increase (in the form
of variable bonus awards and other incentive arrangements) in order to retain and attract employees.

Cash used in investing activities in the three months ended March 31, 2004 of $106.8 million was
attributable to capital expenditures of $86.0 million, net purchases of short-term investments of $17.8 million and cash consideration used in an acquisition of $3.0 million. Cash used in investing activities in the three months ended March 31, 2003
of $59.5 million was attributable to capital expenditures of $29.6 million and net purchases of short-term investments of $29.9 million. Capital expenditures are mainly for the purchase of information technology assets. Cash used in investing
activities in 2003 of $314.0 million was attributable to capital expenditures of $176.8 million, net purchases of short-term investments of $97.2 million and net cash consideration used in acquisitions of $40.0 million. Cash used in investing
activities in 2002 of $109.7 million was primarily attributable to net purchases of short-term investments of $72.6 million and capital expenditures of $37.2 million. Cash used in investing activities in 2001 of $29.1 million was primarily
attributable to net purchases of short-term investments of $14.9 million and capital expenditures of $13.1 million. In order to manage expected increases in Internet traffic, advertising transactions and new products and services, and to
support our overall global business expansion, we will continue to invest heavily in data center operations, technology, corporate facilities and information technology infrastructure. We currently expect to spend at least $250 million on capital
equipment, including information technology infrastructure comprised primarily of production servers and network equipment, to manage our operations during 2004.

Cash provided by financing activities in the three months ended March 31, 2004 of $3.7 million was due to proceeds from
the issuance of common stock pursuant to stock option exercises of $4.9 million, net of repurchases, offset by repayment of capital lease obligations of $1.2 million. Cash provided by financing activities in the three months ended March 31, 2003 of
$3.4 million was due to proceeds from the issuance of common stock pursuant to stock option exercises of $5.6 million, net of repurchases, offset by repayment of equipment loans and capital lease obligations of $2.2 million. Cash provided by
financing activities in 2003 of $8.1 million was due to proceeds from the issuance of common stock pursuant to stock option exercises of $15.5 million, net of repurchases, offset by repayment of equipment loan and lease obligations of $7.4
million. Cash used in financing activities in 2002 of $5.5 million was due to repayment of equipment loan and capital lease obligations of $7.7 million, partially offset by proceeds from the issuance of common stock pursuant to stock option
exercises of $2.3 million, net of repurchases. Cash used in financing activities in 2001 of $2.4 million was primarily due to repayment of equipment loan and capital lease obligations of $4.5 million partially offset by proceeds from the
issuance of convertible preferred stock of $1.0 million and the issuance of common stock pursuant to stock option exercises of $1.0 million, net of repurchases. We estimate that we will receive significant net proceeds from our sale of shares of
Class A common stock offered by us in this offering. We currently have no specific plans for the use of these net proceeds. See Use of Proceeds above. Pending such uses, we plan to invest the net proceeds in highly liquid, investment
grade securities.

In connection with our AdSense revenue share agreements, we are
periodically required to make non-cancelable guaranteed minimum revenue share payments to a small number of our Google Network members over the term of the respective contracts. Under our contracts, these guaranteed payments can vary based on our
Google Network members achieving defined performance terms, such as number of advertisements displayed or search queries. In some cases, certain guaranteed amounts will be adjusted downward if our Google Network members do not meet their performance
terms and, in some cases, these amounts will be adjusted upward if they exceed their performance terms. Upward adjustments are capped at total advertiser fees generated under an AdSense agreement during the guarantee period. The amounts included in
the table above assume that the historical upward performance adjustments with respect to each contract will continue, but do not make a similar assumption with respect to downward adjustments. We believe these amounts best represent a reasonable
estimate of the future minimum guaranteed payments. Actual guaranteed payments may differ from the estimates presented above. To date, total advertiser fees generated under these AdSense agreements have exceeded the total guaranteed minimum revenue
share payments. Five of our Google Network members account for approximately 70% of the total future guaranteed minimum revenue share payments and 10 of our Google Network members account for 91% of these payments. In 2003, we made $108.8 million of
noncancellable minimum guaranteed revenue payments. We recognized cost of revenues of $8.8 million related to $32.1 million of these payments and we recognized net revenues of $38.9 million related to the arrangements under which we made the
remaining $76.7 million of these payments. At March 31, 2004, our aggregate outstanding non-cancelable minimum guarantee commitments totaled $544.8 million.

In addition, in connection with some other AdSense agreements, we have agreed to make an aggregate of $51.9 million of
minimum revenue share payments through 2006. This amount is not included in the above table since we generally have the right to cancel these agreements at any time. Because we sometimes cancel agreements that perform poorly, we do not expect to
make all of these minimum revenue share payments. In 2003, we recognized $13.2 million of cost of revenues under these agreements.

Capital Lease Obligations

At December 31, 2003, we had capital lease obligations of $7.4 million (comprised of $6.6 million of principal and $800,000 of interest) related to
several of our equipment leases. These amounts will come due under the terms of the arrangements at various dates through October 2005.

Operating Leases

During 2003, we entered into a nine-year sublease for our headquarters in Mountain View, California. According to the terms of the sublease, we will begin
making payments in July 2005 and payments will increase at 3% per annum thereafter. We recognize rent expense on our operating leases on a straight-line basis as of the commencement of the lease. The lease terminates on December 31, 2012; however,
we may exercise two five-year renewal options at our discretion. We have an option to purchase the property for approximately $172.4 million, which is exercisable in 2006.

In addition, we have entered into various other non-cancelable operating lease agreements for our offices and certain of
our data centers throughout the U.S. and internationally with original lease periods expiring between 2004 and 2015. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases
have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis. Total payments relating to leases having an initial or remaining non-cancelable term of less than one year are $2.3 million and
are not included in the table above.

Subsequent to
December 31, 2003, we entered into additional non-cancelable operating lease agreements with future minimum commitment payments as follows: $900,000 due in less than 12 months, $11.7 million due in 13-48 months, $6.6 million due in 49-60 months and
$10.6 million due in more than 60 months which are not included in the above table.

Purchase obligations in the above table represent non-cancelable contractual obligations at December 31, 2003. In
addition, we had $24.9 million of open purchase orders for which we have not received the related services or goods at December 31, 2003. This amount is not included in the above table since we have the right to cancel the purchase orders upon 10
days notice prior to the date of delivery. The majority of our purchase obligations are related to data center operations.

Acquisition of Applied Semantics

In April 2003, we acquired all of the outstanding capital stock of Applied Semantics, Inc., a privately held provider of content-targeted advertising
programs. The total purchase price consisted of a cash payment of $41.5 million and 2,382,800 shares of, and options to purchase, Class A common stock. The transaction was accounted for as a business combination. For additional information, see
Note 4 of Notes to Consolidated Financial Statements included as part of this prospectus.

Off-Balance Sheet Entities

At December 31, 2003 and 2002, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established
for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. In doing so, we have to make
estimates and assumptions that affect our reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. In many cases, we could reasonably have used different accounting policies
and estimates. In some cases changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between
these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these
estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss further below. Our management has reviewed our critical accounting policies and estimates with our board of
directors.

Revenue Recognition

Net Versus Gross Revenues

We recognize as revenue the fee an advertiser pays us when a user clicks
on an ad that we have delivered to a Google Network members web site net of the portion we pay that Google Network member. This methodology is based on our determination that we are not the principal to transactions under our AdSense program.
EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, notes that indicators used to determine whether an entity is a principal or an agent to a transaction are subject to significant judgment. We believe the most
meaningful indicator in making such a determination is that our Google Network members provide the access users have to ads we place on our Google Network members web sites. Our Google Network members also determine standards regarding the
types of ads that may be displayed on their web sites. Furthermore, there are two other factors that indicate that we are not the principal in these transactions. First, we only keep a small portion of the advertiser fees generated under these
AdSense agreements. Second, as a result of the presence of guaranteed minimum revenue share obligations, we have on occasion received less advertiser fees than the amounts we are required to pay our Google Network members.

Certain AdSense agreements obligate us to make guaranteed minimum revenue
share payments to Google Network members based on their achieving defined performance terms. Our guaranteed minimum provisions normally cover a period of three months or less, but there may be successive guarantee periods during the term of the
agreement. Because we believe each period covered by a guaranteed minimum is a separate transaction or accounting unit, our policy is to recognize either net revenues or cost of revenues over the period covered by the guaranteed minimum, but not
both. As a result, we amortize any guaranteed minimum prepayment (or accrete an amount payable to our Google Network member if the guaranteed minimum payment is due in arrears) equal to the related advertiser fees we receive until such time as we
can determine it is probable that such fees over the remaining period covered by the guaranteed minimum will be greater than or less than the remaining guaranteed minimum amount. We recognize no net revenues or cost of revenues related to the
guaranteed minimum provision until the time we make such a determination, no later than halfway through the period covered by the guaranteed minimum. Once we make such a determination, we thereafter recognize net revenues or cost of revenues equal
to the amount by which the related advertiser fees are greater than or less than the pro rata amortization or accretion of the remaining guaranteed minimum amount. We occasionally revise such determinations. Thereafter, and to the extent advertiser
fees are greater than or less than the pro rata amortization or accretion of the remaining guaranteed minimum amount, cost of revenue or net revenue amounts previously recognized are not restated. Instead, in the then current period we reduce cost
of revenues or net revenues by the amount previously recognized and any remaining amount is recognized as net revenues or cost of revenues, respectively. We have not reduced any material cost of revenue or net revenue amounts previously recorded in
any of the years presented.

Our determination of
whether an AdSense agreement will be profitable over periods covered by guaranteed minimums or other relevant periods is based on assumptions of matters that are inherently uncertain, such as the number of forecasted paid clicks on our Google
Network members web sites. Although to date our forecasts of specific AdSense agreements have been materially accurate, they may not be accurate in the future. It is possible that actual advertiser fees in the future will be different than
forecasted such that cost of revenues or net revenues previously recognized would be reduced in the current period, which could distort our cost of revenue or net revenue trends.

We do not recognize in a current period the amount by which guaranteed minimums and other costs are expected to exceed
related advertiser fees over the remaining term of an AdSense agreement. Instead, we recognize these costs in the periods in which they are incurred. However, if and at the time an AdSense agreement is terminated or abandoned, we will recognize a
charge against net revenues and/or to cost of revenues to the full extent of our remaining obligations under the terms of the agreement. We have not terminated or abandoned any AdSense agreement that has resulted in a charge against earnings in any
of the periods presented.

If all guaranteed minimums
and other costs related to all AdSense agreements were amortized on a pro rata basis from the commencement of each AdSense agreement, our net revenues would have been the same as reported in 2003 and $800,000 higher than reported in the three months
ended March 31, 2004 and cost of revenues would have been $500,000 higher than reported in 2003 and the same as reported in the three months ended March 31, 2004. There was no difference between the recognition of net revenues and cost of
revenues using either of these two methods during 2002. There were no guaranteed minimums during 2001 because we did not introduce AdSense until 2002.

Additional Payments to Google Network Members

Concurrent with the commencement of certain AdSense agreements we have purchased specific items from, or provided other consideration to, our Google
Network members. According to EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer, cash consideration given by a vendor to a customer is presumed to be a reduction of the selling price of the vendors product or
service and, therefore, should be characterized as a reduction of revenues when recognized in the vendors income statement unless the vendor receives an identifiable benefit in exchange for the consideration and the vendor can reasonably
estimate the value of the

benefit identified. If we determine we will derive little or no benefit from a purchased item, or if we cannot estimate the items fair value, then the
cost of the item is deemed to be part of the AdSense agreement and is amortized against net revenues or to cost of revenues, as the case may be. The cost of such an item, along with other cash payments or the value of other consideration such as
warrants to purchase our stock, is amortized so that neither net revenues nor cost of revenues is recognized until we determine it is probable that the sum of the pro rated cost and any remaining unamortized guaranteed minimum amounts will be either
greater or less than the related gross revenue. The cost is pro-rated over each of the periods covered by the guaranteed minimums or, if there are no guaranteed minimums, over periods not to exceed twelve months. After such a determination has been
made, we amortize the pro rated cost such that only net revenues or cost of revenues is recognized over the remaining term covered by the guaranteed minimum or over a period of not more than twelve months.

The costs of items purchased from, or other consideration provided to,
our Google Network members concurrent with the commencement of certain AdSense agreements that we have determined have no other value to us were $13.9 million, $19.8 million and $600,000 in 2002 and 2003, and in the three months ended March 31,
2004, and the related unamortized amounts were $4.6 million, $18.8 million and $17.9 million at December 31, 2002 and 2003 and March 31, 2004.

Stock-based Compensation

Accounting for Stock-Based Awards to Employees

We have granted to our employees options to purchase our common stock at exercise prices equal to the fair market value of the underlying stock, as
determined by our board of directors, on the date of option grant. For purposes of financial accounting, we have applied hindsight to arrive at deemed values for the shares underlying our options and issued under other transactions. We record
deferred stock-based compensation to the extent that the deemed value of the stock at the date of grant exceeds the exercise price of the option. The deemed values were determined based on a number of factors including input from advisors, our
historical and forecasted operating results and cash flows, and comparisons to publicly-held companies. These valuations are inherently highly uncertain and subjective. If we had made different assumptions, our deferred stock-based compensation
amount, stock-based compensation expense, in-process research and development expense, net income, net income per share and recorded goodwill amounts could have been significantly different.

We recognize compensation expense as we amortize the deferred stock-based
compensation amounts on an accelerated basis over the related vesting periods. The table below shows employee and non-employee stock-based compensation expense recognized during 2001, 2002 and 2003. In addition, the table presents the expected
stock-based compensation expense for options granted to employees prior to January 1, 2004 for each of the next five years and thereafter, assuming no change in the stock option accounting rules and assuming all employees remain employed by us for
their remaining vesting periods. These amounts are compared to the expense and expected expense we would have recognized had we amortized deferred stock-based compensation on a straight-line basis.

Stock-based compensation expense

Year Ended December 31,

2001

2002

2003

2004

2005

2006

2007

2008

thereafter

(in millions)

Accelerated basis

$

12.4

$

21.6

$

229.4

$

204.8

$

96.3

$

47.5

$

16.1

$

3.5

$

1.5

Straight-line basis

$

6.9

$

13.3

$

121.0

$

138.0

$

134.5

$

123.7

$

71.2

$

20.6

$

5.6

We have elected to
not record stock-based compensation expense for employee stock option awards using the Black-Scholes option-pricing model. This model was developed for use in estimating the fair value of freely traded options that have no vesting restrictions and
are fully transferable. In addition, this model requires the input of highly subjective assumptions including the expected life of options and our expected stock price volatility. Because our employee stock options have characteristics significantly
different from those of freely traded options, and because changes in the subjective input assumptions can materially affect the fair value

estimate, in our opinion, this model does not provide a reliable measure of the fair value of our employee stock options. Note 1 of Notes to Consolidated
Financial Statements included as part of this prospectus describes what the impact would have been had we expensed employee stock awards under the fair value method using the Black-Scholes option-pricing model.

Accounting for Stock-Based Awards to Non-employees

We measure the fair value of options to purchase our common stock
granted to non-employees throughout the vesting period as they are earned, at which time we recognize a charge to stock-based compensation. The fair value is determined using the Black-Scholes option-pricing model, which considers the exercise price
relative to the deemed value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield. As discussed above, the deemed values of the underlying stock were based on assumptions of matters that
are inherently highly uncertain and subjective. As there has been no public market for our stock, our assumptions about stock-price volatility are based on the volatility rates of comparable publicly held companies. These rates may or may not
reflect our stock-price volatility should we become a publicly held company. If we had made different assumptions about the deemed values of our stock or stock-price volatility rates, the related stock-based compensation expense and our net income
and net income per share amounts could have been significantly different.

Effect of Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue 00-21, Accounting for Multiple Element Revenue Arrangements, addressing how to account for arrangements that involve the delivery or performance of multiple products, services,
and/or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has value to the customer on a
standalone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered item is probable. Arrangement consideration should be allocated among the separate units of accounting based
on their relative fair values, with the amount allocated to the delivered item limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The guidance in Issue 00-21 is
effective for revenue arrangements entered into in fiscal periods after June 15, 2003. The adoption of Issue 00-21 did not have an impact on our financial statements. See the further discussion in Note 1 of Notes to the Consolidated Financial
Statements included as part of this prospectus.

During
November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a
rescission of FASB Interpretation No. 34 (FIN 45). FIN 45 elaborates on the existing disclosure requirements for a guarantor in its interim and annual financial statements regarding its obligations under guarantees issued. It also clarifies that
at the time a guarantee is issued, the guarantor must recognize an initial liability for the fair value of the obligations it assumes under the guarantee and must disclose that information in its financial statements. The initial recognition and
measurement provisions apply on a prospective basis to guarantees of third party obligations issued or modified after December 31, 2002, and the disclosure requirements apply to such guarantees outstanding at December 31, 2002. The Company adopted
the provisions of FIN 45 at January 1, 2003. The adoption of this Interpretation did not have an impact on our operating results. See further discussion regarding indemnifications in Note 7 to the Notes to the Consolidated Financial Statements
included with this prospectus.

In January 2003, the FASB
issued Interpretation No. 46, Consolidation of Variable Interest Entities. Interpretation No. 46 clarifies the application of Accounting Research Bulletin No. 51. This Interpretation requires variable interest entities to be consolidated if
the equity investment at risk is not sufficient to permit an entity to finance its activities without support from other parties or the equity investors lack specified characteristics. We do not have any variable interest entities.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify
certain financial instruments as a liability (or as an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an impact on our financial statements.

Qualitative and Quantitative Disclosures about Market Risk

We are exposed to financial market risks, including changes in currency exchange rates, interest rates and marketable equity security prices.

Foreign Exchange Risk

Our exposure to foreign currency transaction gains and losses is the
result of certain net receivables of the U.S. parent due from its subsidiaries and customers being denominated in currencies other than the U.S. dollar, primarily the British Pound, the Euro and the Japanese Yen. Our foreign subsidiaries conduct
their businesses in local currency. We recognized a foreign currency transaction loss of $700,000 as a result of generally weakening foreign currencies against the U.S. dollar throughout the three months ended March 31, 2004. Also, we recognized a
foreign currency transaction gain of $2.1 million as a result of generally strengthening foreign currencies against the U.S. dollar throughout 2003. Effective January 2004, we began to bill our international online sales through a foreign
subsidiary, which will lower our exposure to foreign currency transaction gains and losses. In addition, effective January 2004 our board of directors approved a foreign exchange hedging program designed to minimize the future potential impact due
to changes in foreign currency exchange rates. The program allows for the hedging of transaction exposures. The types of derivatives that can be used under the policy are forward contracts, options and foreign exchange swaps. The primary vehicle we
expect to use will be forward contracts. We also generate revenue in certain countries in Asia where there are limited forward currency exchange markets, thus making these exposures difficult to hedge. Currently, we have no foreign currency hedges
in place.

Our exposure to foreign currency translation
gains and losses arises from the translation of certain net assets of our subsidiaries to U.S. dollars during consolidation. During 2003, we recognized a foreign currency translation gain of $1.7 million as a result of greater aggregate net assets
of our subsidiaries and stronger foreign currencies compared to the U.S. dollar at December 31, 2003 than at December 31, 2002.

We considered the historical trends in currency exchange rates and determined that it was reasonably possible that adverse changes in exchange rates of
10% for all currencies could be experienced in the near term. These changes would have resulted in an adverse impact on income before taxes of approximately $14.5 million and $4.5 million at March 31, 2004 and December 31, 2003. These
reasonably possible adverse changes in exchange rates of 10% were applied to total monetary assets denominated in currencies other than the local currencies at the balance sheet dates to compute the adverse impact these changes would have had on our
income before taxes in the near term. The increase in the reasonably possible adverse impact of $14.5 million and $4.5 million at March 31, 2004 and December 31, 2003 were primarily the result of an increase in intercompany receivables and cash
related to the formation of our Irish subsidiary. The transaction gains and losses that netted to a $700,000 loss and a $2.1 million gain in the three months and year ended March 31, 2004 and December 31, 2003 are a function of the exchange rates on
the dates these transactions were entered into and the dates they were settled or the balance sheet dates.

Interest Rate Risk

We invest in a variety of securities, consisting primarily of investments in interest-bearing demand deposit accounts with financial institutions,
tax-exempt money market funds and highly liquid debt securities of corporations and municipalities. By policy, we limit the amount of credit exposure to any one issuer.

Investments in both fixed rate and floating rate interest earning products carry a degree of interest
rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due in part to these factors, our
income from investments may decrease in the future.

We
considered the historical volatility of short term interest rates and determined that it was reasonably possible that an adverse change of 100 basis points could be experienced in the near term. A hypothetical 1.00% (100 basis-point) increase in
interest rates would have resulted in a decrease in the fair values of our investment securities of approximately $2.5 million and $1.9 million at March 31, 2004 and December 31, 2003.

Google is a global technology leader focused on improving the ways people
connect with information. Our innovations in web search and advertising have made our web site a top Internet destination and our brand one of the most recognized in the world. We maintain the worlds largest online index of web sites and other
content, and we make this information freely available to anyone with an Internet connection. Our automated search technology helps people obtain nearly instant access to relevant information from our vast online index.

We generate revenue by delivering relevant, cost-effective online
advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party web sites that comprise our Google Network use our Google AdSense program to deliver relevant
ads that generate revenue and enhance the user experience.

Our Mission

Our mission is to organize the worlds information
and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience
leads to increased traffic and strong word-of-mouth promotion. Our dedication to putting users first is reflected in three key commitments we have made to our users:



We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept
payment for inclusion or ranking in them.



We will do our best to provide the most relevant and useful advertising. If any element on a result page is influenced by payment to us, we will make it clear to our users.
Advertisements should not be an annoying interruption.



We will never stop working to improve our user experience, our search technology and other important areas of information organization.

We believe that our user focus is the foundation of our success to date. We
also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.

How We Provide Value to Users, Advertisers and Web Sites

Our Users

We serve our users by developing products that enable people to more quickly and easily find, create and organize information. We place a premium on
products that matter to many people and have the potential to improve their lives, especially in areas in which our expertise enables us to excel.

Search is one such area. People use search frequently and the results are often of great importance to them. For example, people search for information on
medical conditions, purchase decisions, technical questions, long-lost friends and other topics about which they care a great deal. Delivering quality search results requires significant computing power, advanced software and complex
processesareas in which we have expertise and a high level of focus.

Communication is another such area. People increasingly rely on the Internet to communicate with each other. Gmail, our new email service (still in test mode), offers a gigabyte of free storage for each user, along
with email search capabilities and relevant advertising. Delivering an improved user experience in Gmail has similar computing and software requirements as our search service.

Relevant and Useful Information. Our
technologies sort through a vast and growing amount of information to deliver relevant and useful search results in response to user queries. This is an area of continual development for us. When we started the company five years ago, our web index
contained approximately 30 million documents. We now index more than 4 billion web pages, or more than 100 times as much information. We are also constantly developing new functionality. Recent enhancements include personalization, which lets users
specify interests to help our technology generate customized search results; and local search, which lets users look for web pages and businesses based on a certain geographic location. We also provide convenient links to specialized information,
such as definitions, maps and travel information.

Objectivity. We believe it is very important that the results users get from Google are produced with only their interests in mind. We do not accept money for search result ranking or inclusion. We do accept
fees for advertising, but it does not influence how we generate our search results. The advertising is clearly marked and separated. This is similar to a newspaper, where the articles are independent of the advertising. Some of our competitors
charge web sites for inclusion in their indices or for more frequent updating of pages. Inclusion and frequent updating in our index are open to all sites free of charge. We apply these principles to each of our products and services. We believe it
is important for users to have access to the best available information and research, not just the information that someone pays for them to see.

Global Access. We strive to provide Google to everyone in the world. Users from around the world visit our destination sites
at Google.com and our 95 other international domains, such as Google.de, Google.fr, Google.co.uk, Google.co.jp and Google.ca. The Google interface is available in more than 90 languages. Through Google News, we offer an automated collection of
frequently updated news stories tailored to 10 international audiences. We also offer automatic translation of content between various languages. We provide localized versions of Google in many developing countries. Although we do not currently
recover our costs in these countries, we believe providing our products and services is an important social good and a valuable long-term business investment.

Ease of Use. We have always believed that the most useful and powerful search technology hides
its complexity from users and provides them with a simple, intuitive way to get the information they want. We have devoted significant efforts to create a streamlined and easy-to-use interface based on a clean search box set prominently on a page
free of commercial clutter. We have also created many features that enhance the user experience. Our products present these features when we believe they will be most useful, rather than promoting them unnecessarily. For example, Google WebSearch
offers maps when a search appears to be for a geographic location.

Pertinent, Useful Commercial Information. The search for information online often involves an interest in commercial informationresearching a purchase, comparing products and services or actively
shopping. We help people find commercial information through our search services and by presenting ads that are relevant to the information people seek. To ensure we display only the most relevant commercial information, our technology automatically
rewards ads that users prefer and removes ads that users do not find helpful. For example, among our search services, we offer Froogle, a search engine for finding products for sale online.

Our Advertisers

As more people spend additional time and money online, advertisers are
increasingly turning to the Internet to market their products and services to consumers. For these advertisers, we offer Google AdWords, an auction-based advertising program that enables them to deliver relevant ads targeted to search results or web
content. Our AdWords program provides advertisers with a cost-effective way to deliver ads to customers across Google sites and through the Google Network. The advertisers using AdWords range from small businesses targeting local customers to many
of the worlds largest global enterprises.

Effective Return on Investment. Many
advertising dollars are wasted because they are spent delivering messages that are ignored or that reach too broad an audience. With Google AdWords, businesses can achieve greater cost-effectiveness with their marketing budgets for two
reasonsAdWords shows ads only to people seeking information related to what the advertisers are selling, and advertisers pay us only when a user clicks on one of their ads. Because we offer a simple ad format, advertisers can avoid incurring
significant design, copywriting or other production costs associated with creating ads. As a result, even small advertisers find AdWords cost-effective for connecting with potential customers. In addition, advertisers can easily create many
different ads, increasing the likelihood that an ad is exactly suited to a users search. Users can find advertisements for exactly what they are seeking, and advertisers can find users who want exactly what they are offering. When the
interests of users and advertisers align, both are well served.

Access to the Google Network. We serve AdWords ads to the thousands of third-party web sites that make up the Google Network. As a result, advertisers that use our AdWords program can target users on our sites
and on search and content sites across the web. This gives advertisers increased exposure to people who are likely to be interested in their offerings. The Google Network significantly enhances our ability to attract interested users.

Precise Campaign Control. Google AdWords gives
advertisers hands-on control over most elements of their ad campaigns. Advertisers can specify the relevant search or content topics for each of their ads. Advertisers can also manage expenditures by setting a maximum daily budget and determining
how much they are willing to pay whenever a user clicks on an ad. Our online tracking tools and reports give advertisers timely updates on how well their campaigns are performing and enable them to make changes or refinements quickly. Advertisers
can also target their campaigns by neighborhood, city, country, region or language.

Global Support. We provide customer service to our advertiser base through our global support organization as well as through field sales offices in 11 countries. AdWords is available on
a self-service basis with email support. Advertisers with more extensive needs and budgets can request strategic support services, which include an account team of experienced professionals to help them set up, manage and optimize their campaigns.

Web Sites

Nearly every web site in the world is indexed and made searchable by Google.
Our users do searches and are directed to relevant web sites. Google provides a significant amount of traffic to web sites with which we have no business relationship. Many web sites are able to generate revenue from that traffic, but others have
difficulty doing so. We are enthusiastic about helping sites make money and thereby facilitating the creation of better content to search. If there is better content on the web, people are likely to do more searches, and we expect that will be good
for our business and for users. To address this opportunity, we created Google AdSense. Our Google AdSense program enables the web siteslarge and smallthat make up the Google Network to deliver AdWords ads that are relevant to the search
results or content on their pages. We share most of the revenue generated from ads shown by a member of the Google Network with that membercreating an additional revenue stream for them. Web sites can also license our Google WebSearch product
to offer the Google search experience to their users. The key benefits we offer to web sites in the Google Network include:

Access to Advertisers. Many small web site companies do not have the time or resources to develop effective programs for
generating revenue from online advertising. Even larger sites, with dedicated sales teams, may find it difficult to generate revenue from pages with specialized content. We believe that Google AdSense enables Google Network members to generate
revenue from their sites more effectively and efficiently. Google AdSense promotes effective revenue generation by providing Google Network members immediate access to Googles base of advertisers and their broad collection of ads. As soon as a
web site joins the Google Network, our technology automatically begins delivering ads for posting on the members web site. The automated nature of our advertising programs promotes efficient revenue generation. Our online registration systems
enable web

sites to easily join the Google Network and our ad serving technology allows automated delivery of ads for posting on the members site. The Google
Network member determines the placement of the ads on its web site and controls and directs the nature of ad content.

Improved User Satisfaction. In their quest for revenue, many Internet companies have cluttered their web sites with
intrusive or untargeted advertising that may distract or confuse users and may undermine users ability to find the information they want. Some web sites have adopted practices we consider to be abusive, including pop-up ads or ads that take
over web pages. We believe these tactics can cause dissatisfaction with Internet advertising and reduce use of the Internet overall. Our AdSense program extends our commitment to improving the overall web experience for users by enabling web sites
to display AdWords ads in a fashion that we believe people find useful rather than disruptive.

Products and Services

Our product development philosophy is centered on rapid and continuous innovation, with frequent releases of test products that we seek to improve with every iteration. We often make products available early in their development stages by
posting them on Google Labs, at test locations online or directly on Google.com. If our users find a product useful, we promote it to beta status for additional testing. Our beta testing periods often last a year or more. Once we are
satisfied that a product is of high quality and utility, we remove the beta label and make it a core Google product. Our current principal products and services are described below.

Google.com

We are focused on building products and services that benefit our users and enable them to find relevant information quickly and easily. We offer, free of
charge, all of the following services at Google.com and many of them at our international sites.

Google WebSearch. In addition to providing easy access to more than 4 billion web pages, we have integrated special features
into Google WebSearch to help people find exactly what they are looking for on the web. The Google.com search experience also includes:



Advanced Search Functionalityenables users to construct more complex queries, for example by using Boolean logic or restricting results to languages, countries or web sites.

Cached Linksprovides snapshots of web pages taken when the pages were indexed, enabling web users to view web pages that are no longer available.

Google Image Search. Google Image Search is our
searchable index of 880 million images found across the web. To extend the usefulness of Google Image Search, we offer advanced features, such as searching by image size, format and coloration and restricting searches to specific web sites or
domains.

Google News. Google
News gathers information from nearly 10,000 news sources worldwide and presents news stories in a searchable format within minutes of their publication on the web. The leading stories are presented as headlines on the Google News home page. These
headlines are selected for display entirely by a computer algorithm, without regard to political viewpoint or ideology. Google News uses an automated process to pull together related headlines, which enables people to see many different viewpoints
on the same story. Because topics are updated continuously throughout the day, people generally see new stories each time they check Google News. We currently provide our Google News service tailored to 10 international audiences.

Google Toolbar. The Google Toolbar makes our
search technology constantly and easily available as people browse the web. The Google Toolbar is available as a free, fast download and can improve peoples web experience through several innovative features, including:



Pop-up Blockerblocks pop-up advertising while people use the web.



PageRank Indicatordisplays Googles ranking of any page on the web.



AutoFillcompletes web forms with information saved securely on a users own computer.



Highlighthighlights search terms where they appear on a web page, with each term marked in a different color.



Word Findfinds search terms wherever they appear on a web page.

Froogle. Froogle enables people to easily find products for sale online. By focusing entirely on product search, Froogle
applies the power of our search technology to a very specific tasklocating stores that sell the items users seek and pointing them directly to the web sites where they can shop. Froogle users can sort results by price, specify a desired price
range and view product photos. Froogle accepts data feeds directly from merchants to ensure that product information is up-to-date and accurate. Most online merchants are also automatically included in Froogles index of shopping sites. Because
we do not charge merchants for inclusion in Froogle, our users can browse product categories or conduct product searches with confidence that the results we provide are relevant and unbiased. As with many of our products, Froogle displays relevant
advertising separately from search results.

Google
Groups. Google Groups enables easy participation in Internet discussion groups by providing users with tools to search, read and browse these groups and to post messages of their own. Google Groups contains the entire
archive of Usenet Internet discussion groups dating back to 1981more than 845 million posted messages. The discussions in these groups cover a broad range of discourse and provide a comprehensive look at evolving viewpoints, debate and
advice on many subjects.

Google Wireless. Google Wireless offers people the ability to search
and view both the mobile web, consisting of 5 million pages created specifically for wireless devices, and the entire Google index of more than 4 billion web pages. Google Wireless works on devices that support WAP, WAP 2.0,
i-mode or j-sky mobile Internet protocols. Google Wireless is available through many wireless and mobile phone services worldwide.

Google Web Directory. Google Web Directory enables people to browse and search through web sites that have been organized
into categories. Our directory combines Googles search technology with the categorization developed by the Open Directory Project and is available in 73 languages.

Google Local. Google Local enables users to find relevant local information based on zip
codes, cities or specific addresses. Google Local results include neighborhood business listings, addresses, phone numbers, maps and directions.

Google Answers. Google Answers provides people with help finding information and answering questions. Users set a fee they
are willing to pay and submit questions to the Google Answers service. One of more than 500 carefully screened freelance researchers responds, usually within 24 hours. Google Answers researchers are experienced web searchers with strong
communication skills who often have expertise in various fields. An extensive collection of past responses is available to our users free of charge.

Google Catalogs. With Google Catalogs, we provide access to the full content of more than 6,600 mail-order catalogs, many of
which were previously unavailable online.

Google
Print. Google Print brings information online that had previously not been available to web searchers. Under this program, we have been experimenting with a number of publishers to host their content and rank their
publications in our search results using the same technology we use to evaluate web sites. On Google Print pages, we provide links to book sellers that may offer the full versions of these publications for sale, and we show content-targeted ads that
are served through the Google AdSense program.

Google
Labs. Google Labs is our playground for our engineers and for adventurous Google users. On Google Labs, we post product prototypes and solicit feedback on how the technology could be used or improved. Current Google Labs
examples include:

Google Deskbarenables people to search with Google from the taskbar of their computer without launching a web browser.



Voice Searchenables people to dial a phone number, tell our system what they are looking for and hear Google search results read to them by a computer.



Froogle Wirelessgives people the ability to search for product information from their mobile phones and other wireless devices.

Blogger. Blogger is a leading web-based
publishing tool that gives people the ability to publish to the web instantly using weblogs, or blogs. Blogs are web pages usually made up of short, informal, frequently updated posts that are arranged chronologically. Blogs can
facilitate communications among small groups or to a worldwide audience in a way that is simpler and easier to follow than traditional email or discussion forums.

Limited Availability Services. Some of our product offerings are in their initial test phases
and are currently available to limited audiences. Examples include Gmail, our free email service, and Orkut, an invitation-based online meeting place where people can socialize, make new acquaintances and find others who share their interests.

Google AdWords is our global advertising program, which enables advertisers to present ads to people at the precise moment
those people are looking for information related to what the advertiser has to offer. Advertisers use our automated tools, often with little or no assistance from us, to create text-based ads, bid on the keywords that will trigger the display of
their ads and set daily spending budgets. AdWords features an automated, low-cost online signup process that enables advertisers to implement ad campaigns that can become live in 15 minutes or less. The total sign-up cost for becoming an AdWords
advertiser is only $5.00.

Ads are ranked for display in
AdWords based on a combination of the maximum cost per click (CPC) set by the advertiser and click-through rates and other factors used to determine the relevance of the ads. This favors the ads that are most relevant to users, improving the
experience for both the person looking for information and the advertiser looking for interested customers. AdWords has many features that make it easy to set up and manage ad campaigns for maximum efficiency and effectiveness:



Campaign management. Advertisers can target multiple ads to a given keyword and easily track individual ad performance to see which ads are the most
effective. The campaign management tools built into AdWords enable advertisers to quickly shift their budgets to ads that deliver the best results.



Keyword targeting. Businesses can deliver targeted ads based on specific search terms (keywords) entered by users or found in the content on a web
page. We also offer tools that suggest synonyms and useful phrases to use as keywords or ad text. These suggestions can improve ad click-through rates and the likelihood of a user becoming a customer of the advertiser.



Traffic estimator. This tool estimates the number of searches and potential costs related to advertising on a particular keyword or set of keywords.
These estimates can help advertisers optimize their campaigns.



Budgeted delivery. Advertisers can set daily budgets for their campaigns and control the timing for delivery of their ads.



Performance reports. We provide continuous, timely reporting of the effectiveness of each ad campaign.



Multiple payment options. We accept credit and debit cards and, for selected advertisers, we offer several options for credit terms and monthly
invoicing. We accept payments in 48 currencies.



AdWords discounter. This feature gives advertisers the freedom to increase their maximum CPCs because it automatically adjusts pricing so that they
never pay more than one cent over the next highest bid. The AdWords discounter is described in detail below under the heading TechnologyAdvertising TechnologyGoogle AdWords Action System.

For larger advertisers, we offer additional services that help to maximize
returns on their Internet marketing investments and improve their ability to run large, dynamic campaigns. These include:



Creative maximization. Our AdWords specialists help advertisers select relevant keywords and create more effective ads. This can improve
advertisers ability to target customers and to increase the click-through rates and conversion rates for their ads.



Vertical market experts. Specialists with experience in particular industries offer guidance on how to most effectively target potential customers.



Bulk posting. We assist businesses in launching and managing large ad campaigns with hundreds or even thousands of targeted keywords.



Dedicated client service representatives. These staff members continuously look for ways to better structure their clients campaigns and to
address the challenges large advertisers face.

Our Google AdSense program enables the web sites in our Google Network to serve targeted ads from our AdWords
advertisers. Targeting can be based on search results or on web content. We share most of the revenue generated from ads shown by a member of the Google Network with that member. Most of the web sites that make up the Google Network sign up with us
online, under agreements with no required term. We also engage in direct selling efforts to convince web sites with significant traffic to join the Google Network, under agreements that vary in duration. For our network members, we offer:

Google AdSense for
search. For Internet companies with potentially large search audiences, we offer Google AdSense for search. Web sites use AdSense for search to generate additional revenue by serving relevant AdWords ads targeted to search
results. Because we also offer to license our web search technology along with Google AdSense for search, companies without their own search service can offer Google WebSearch to improve the usefulness of their web sites for their users while
increasing their revenue.

Google AdSense for
content. Google AdSense for content enables web sites to generate revenue from advertising by serving relevant AdWords ads targeted to web content. Our automated technology analyzes the meaning of web content and serves
relevant advertising, usually in a fraction of a second. We believe that some of the best content on the web comes from web sites aiming to reach small but highly targeted audiences. AdSense for content can help these web sites offset some of their
publishing costs. We believe this may help them continue to publish by tapping into the value of their content. There is no charge for web sites to participate in our AdSense for content program. Using our automated sign-up process, web sites can
quickly display AdWords ads on their sites. We share the majority of the revenues generated from click-throughs on these ads with the Google Network members that display the ads. For web sites with more than 20 million page views per month, we
provide customization services.

Google Search Appliance

We provide our search technology for use within
enterprises through the Google Search Appliance (GSA). The GSA is a complete software and hardware solution that companies can easily implement to extend Googles search performance to their internal or external information. The GSA can often
be installed and launched in as little as one day. It leverages our search technology to identify the most relevant pages on intranet and public web sites, making it easy for people to find the information they need. The GSA offers several useful
features, including automated spell-checking, cached pages, dynamic snippets, indented results and automatic conversion of Microsoft Office and PDF files to HTML. The GSA is available in three models: the GB-1001, for departments and mid-sized
companies; the GB-5005, for dedicated, high-priority search services such as customer-facing web sites and company-wide intranet applications; and the GB-8008, for centralized deployments supporting global business units. List prices for our GSA
models start at $32,000 for the GB-1001, $230,000 for the GB-5005 and $525,000 for the GB-8008.

Technology

We
began as a technology company and have evolved into a software, technology, Internet, advertising and media company all rolled into one. We take technology innovation very seriously. We compete aggressively for talent, and our people drive our
innovation, technology development and operations. We strive to hire the best computer scientists and engineers to help us solve very significant challenges across systems design, artificial intelligence, machine learning, data mining, networking,
software engineering, testing, distributed systems, cluster design and other areas. We work hard to provide an environment where these talented people can have fulfilling jobs and produce technological innovations that have a positive effect on the
world through daily use by millions of people. We employ technology whenever possible to increase the efficiency of our business and to improve the experience we offer our users.

We provide our web search and targeted advertising technology using a large network of commodity computers running custom
software developed in-house. Some elements of our technology include:

Our web search technology uses a combination of techniques to determine the importance of a web page independent of a
particular search query and to determine the relevance of that page to a particular search query. We do not explain how we do ranking in great detail because some people try to manipulate our search results for their own gain, rather than in an
attempt to provide high-quality information to users.

PageRank and Ranking Technology. One element of our technology for ranking web pages is called PageRank. While we developed much of our ranking technology after the company was formed, PageRank was developed at
Stanford University with the involvement of our founders, and was therefore published as research. Most of our current ranking technology is protected as trade-secret. PageRank is a query-independent technique for determining the importance of web
pages by looking at the link structure of the web. PageRank treats a link from web page A to web page B as a vote by page A in favor of page B. The PageRank of a page is the sum of the PageRank of the pages that link to it. The PageRank
of a web page also depends on the importance (or PageRank) of the other web pages casting the votes. Votes cast by important web pages with high PageRank weigh more heavily and are more influential in deciding the PageRank of pages on the web.

Text-Matching Techniques. Our
technology employs text-matching techniques that compare search queries with the content of web pages to help determine relevance. Our text-based scoring techniques do far more than count the number of times a search term appears on a web page. For
example, our technology determines the proximity of individual search terms to each other on a given web page, and prioritizes results that have the search terms near each other. Many other aspects of a pages content are factored into the
equation, as is the content of pages that link to the page in question. By combining query independent measures such as PageRank with our text-matching techniques, we are able to deliver search results that are relevant to what people are trying to
find.

Advertising Technology

Our advertising program serves millions of relevant, targeted ads each day
based on search terms people enter or content they view on the web. The key elements of our advertising technology include:

Google AdWords Auction System. We use the Google AdWords auction system to enable advertisers to automatically deliver
relevant, targeted advertising. Every search query we process involves the automated execution of an auction, resulting in our advertising system often processing hundreds of millions of auctions per day. To determine whether an ad is relevant to a
particular query, this system weighs an advertisers willingness to pay for prominence in the ad listings (the CPC) and interest from users in the ad as measured by the click-through rate and other factors. If an ad does not attract user
clicks, it moves to a less prominent position on the page, even if the advertiser offers to pay a high amount. This prevents advertisers with irrelevant ads from squatting in top positions to gain exposure. Conversely, more relevant,
well-targeted ads that are clicked on frequently move up in ranking, with no need for advertisers to increase their bids. Because we are paid only when users click on ads, the AdWords ranking system aligns our interests equally with those of our
advertisers and our users. The more relevant and useful the ad, the better for our users, for our advertisers and for us.

The AdWords auction system also incorporates our AdWords discounter, which automatically lowers the amount advertisers actually pay to the minimum needed
to maintain their ad position. Consider a situation where there are three advertisersPat, Betty and Joeeach bidding on the same keyword for ads that will be displayed on Google.com. These advertisers have ads with equal click-through
rates and bid $1.00 per click, $0.60 per click and $0.50 per click, respectively. With our AdWords discounter, Pat would occupy the first ad position and pay only $0.61 per click, Betty would occupy the second ad position and pay only $0.51 per
click, and Joe would occupy the third ad position and pay the minimum bid of $0.05 per click. The AdWords discounter saves money for advertisers by minimizing the price they pay per click, while relieving them of the need to constantly monitor and
adjust their CPCs. Advertisers can experience greater discounts through the application of our smart pricing technology introduced in April 2004. This technology can reduce the price of clicks for ads served across the Google Network based on the
expected value of the click to the advertiser.

AdSense Contextual Advertising Technology. Our AdSense technology
employs techniques that consider factors such as keyword analysis, word frequency, font size and the overall link structure of the web to analyze the content of individual web pages and to match ads to them almost instantaneously. With this ad
targeting technology, we can automatically serve contextually relevant ads. To do this, Google Network members embed a small amount of custom HTML code on web pages that generates a request to Googles AdSense service whenever a user views the
web page. Upon receiving a request, our software examines the content of web pages and performs a matching process that identifies advertisements that we believe are relevant to the content of the specific web page. The relevant ads are then
returned to the web pages in response to the request. We employ similar techniques for matching advertisements to other forms of textual content, such as email messages and Google Groups postings. For example, our technology can serve ads offering
tickets to fans of a specific sports team on a news story about that team.

Large-Scale Systems Technology

Our business relies on our software and hardware infrastructure, which provides substantial computing resources at low cost. We currently use a combination of off-the-shelf and custom software running on clusters of
commodity computers. Our considerable investment in developing this infrastructure has produced several key benefits. It simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global
products and services and automates much of the administration of large-scale clusters of computers.

Although most of this infrastructure is not directly visible to our users, we believe it is important for providing a high-quality user experience. It
enables significant improvements in the relevance of our search and advertising results by allowing us to apply superior search and retrieval algorithms that are computationally intensive. We believe the infrastructure also shortens our product
development cycle and allows us to pursue innovation more cost effectively.

We constantly evaluate new hardware alternatives and software techniques to help further reduce our computational costs. This allows us to improve our existing products and services and to more easily develop, deploy
and operate new global products and services.

Sales and Support

We have put significant effort into developing our sales
and support infrastructure. We maintain 21 sales offices in 11 countries, and we deploy specialized sales teams across 18 vertical markets. We bring businesses into our advertising network through both online and direct sales channels. In all cases,
we use technology and automation wherever possible to improve the experience for our advertisers and to grow our business cost-effectively. The vast majority of our advertisers use our automated online AdWords program to establish accounts, create
ads, target users and launch and manage their advertising campaigns. Our direct advertising sales team focuses on attracting and supporting companies around the world with sizeable advertising budgets. Our AdSense program follows a similar model.
Most of the web sites in the Google Network sign up for AdSense using an automated online process. Our direct sales force focuses on building AdSense relationships with leading Internet companies. Our global support organization concentrates on
helping our advertisers and Google Network members get the most out of their relationships with us.

Marketing

We have
always believed that building a trusted, highly-recognized brand begins with providing high-quality products and services that make a notable difference in peoples lives. Our user base has grown primarily by word-of-mouth, which can work very
well for products that inspire a high level of user loyalty because users are likely to share their positive experiences with their friends and families. Our early marketing efforts focused on feeding this word-of-mouth momentum and used public
relations efforts to accelerate it. Through these efforts and peoples increased usage of Google worldwide, we have been able to build our brand with relatively low marketing costs. Today, we use the quality of our own products and services as
our most effective marketing

tool, and word-of-mouth momentum continues to drive consumer awareness and user loyalty worldwide. We do not promote products before they are successful for
our users, preferring to test them until they achieve broad acceptance. We also engage in targeted marketing efforts, such as those we deliver to our advertising clients, designed to inform potential advertisers, Google Network members and
enterprises of the benefits they can achieve through Google. In addition, we sponsor industry conferences and have promoted the distribution of the Google Toolbar to Internet users in order to make our search services easier to access.

Competition

We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect
people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo.

We also face competition from other web search providers, including companies that are not yet known to us. We compete with Internet advertising
companies, particularly in the areas of pay-for-performance and keyword-targeted Internet advertising. We may compete with companies that sell products and services online because these companies, like us, are trying to attract users to their web
sites to search for information about products and services. In addition to Internet companies, we face competition from companies that offer traditional media advertising opportunities.

We compete to attract and retain relationships with users, advertisers and web sites. The bases on which we compete differ
among the groups.



Users. We compete to attract and retain users of our search and communication products and services. Most of the products and services we offer to
users are free, so we do not compete on price. Instead, we compete in this area on the basis of the relevance and usefulness of our search results and the features, availability and ease of use of our products and services.



Advertisers. We compete to attract and retain advertisers. We compete in this area principally on the basis of the return on investment realized by
advertisers using our AdWords program. We also compete based on the quality of customer service, features and ease of use of AdWords.



Web sites. We compete to attract and retain web sites as members of our Google Network based on the size and quality of our advertiser base, our
ability to help our Google Network members generate revenues from advertising on their web sites and the terms of agreements with our Google Network members.

We believe that we compete favorably on the factors described above. However, our industry is evolving rapidly and is
becoming increasingly competitive. Larger, more established companies than us are increasingly focusing on search businesses that directly compete with us.

Intellectual Property

We rely on a combination of patent, trademark, copyright and trade secret laws in the U.S. and other jurisdictions as well as confidentiality procedures
and contractual provisions to protect our proprietary technology and our brand. We also enter into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we
rigorously control access to proprietary technology.

Google is
a registered trademark in the U.S. and several other countries. Our unregistered trademarks include: AdSense, AdWords, Blogger, Froogle, Gmail, Im Feeling Lucky and PageRank.

The first version of the PageRank technology was created while Larry and Sergey attended Stanford University, which owns
a patent to PageRank. The PageRank patent expires in 2017. We hold a perpetual license to this patent. In October 2003, we extended our exclusivity period to this patent through 2011, at which point our license is non-exclusive.

Circumstances outside our control could pose a threat to our intellectual property rights. For example,
effective intellectual property protection may not be available in every country in which our products and services are distributed. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any
significant impairment of our intellectual property rights could harm our business or our ability to compete. Also, protecting our intellectual property rights is costly and time consuming. Any increase in the unauthorized use of our intellectual
property could make it more expensive to do business and harm our operating results.

Companies in the Internet, technology and media industries own large numbers of patents, copyrights and trademarks and frequently enter into litigation based on allegations of infringement or other violations of
intellectual property rights. As we face increasing competition, the possibility of intellectual property claims against us grows. Our technologies may not be able to withstand any third-party claims or rights against their use.

Government Regulation

We are subject to a number of foreign and domestic laws that affect
companies conducting business on the Internet. In addition, because of the increasing popularity of the Internet and the growth of online services, laws relating to user privacy, freedom of expression, content, advertising, information security and
intellectual property rights are being debated and considered for adoption by many countries throughout the world.

In the U.S., laws relating to the liability of providers of online services for activities of their users are currently being tested by a number of
claims, which include actions for defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, copyright or trademark infringement, or other theories based on the nature and content of the materials searched and
the ads posted or the content generated by users. In addition, several other federal laws could have an impact on our business. For example, the Digital Millennium Copyright Act has provisions that limit, but do not eliminate, our liability for
listing or linking to third-party web sites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act. The Childrens Online Protection Act and the Childrens Online
Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. In addition, the Protection of Children from Sexual
Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances.

In addition, the application of existing laws regulating or requiring licenses for certain businesses of our advertisers, including, for example,
distribution of pharmaceuticals, adult content, financial services, alcohol or firearms, can be unclear. Existing or new legislation could expose us to substantial liability and restrict our ability to deliver services to our users.

At least two states have recently introduced proposed legislation that
could interfere with or prohibit our Gmail free advertising-supported web mail service, which was recently announced as a test service. The legislation, as originally proposed in California and Massachusetts, would make it more difficult for us to
operate or would prohibit the aspects of the service that process the contents of users e-mail messages for the purpose of identifying and displaying ads relevant to that content. While the proposed legislation has been modified in one of the
states so that it does not inhibit the operation of the Gmail service, the legislation has not been finally adopted. If this legislation is adopted as originally proposed, or other similar legislation is adopted, it could prevent us from
implementing the Gmail service in the affected states. The company worked with legislators in the state in which the proposed legislation was amended to craft legislation that is narrowly tailored to privacy concerns. Google intends to address
privacy related concerns and future proposed legislation by educating the public and legislators about the Google products and services, and by working closely with legislators to craft laws that are not overly broad.

We are also subject to international laws associated with data protection
in Europe and elsewhere and the interpretation and application of data protection laws is still uncertain and in flux. In addition, because our services are accessible worldwide, foreign jurisdictions may claim that we are required to comply with
their laws.

We take great pride in our company culture and embrace it as one of our fundamental strengths. We remain steadfast in our commitment to constantly improve
the technology we offer to our users and advertisers and to web sites in the Google Network. We have assembled what we believe is a highly talented group of employees. Our culture encourages the iteration of ideas to address complex technical
challenges. In addition, we embrace individual thinking and creativity. As an example, we encourage our engineers to devote 20% of their time to work on independent projects. Many of our significant new products have come from these independent
projects, including Google News, AdSense for content and Orkut.

Despite our rapid growth, we constantly seek to maintain a small-company feel that promotes interaction and the exchange of ideas among employees. We try to minimize corporate hierarchy to facilitate meaningful communication among employees
at all levels and across departments, and we have developed software to help us in this effort. We believe that considering multiple viewpoints is critical to developing effective solutions, and we attempt to build consensus in making decisions.
While teamwork is one of our core values, we also significantly reward individual accomplishments that contribute to our overall success. As we grow, we expect to continue to provide compensation structures that are more similar to those offered by
start-ups than established companies. We will focus on very significant rewards for individuals and teams that build amazing things that provide significant value to us and our users.

At March 31, 2004, we had 1,907 employees, consisting of 596 in research and development, 961 in sales and marketing and 350
in general and administrative. All of Googles employees are also shareholders, with significant collective employee ownership. As a result, many employees are highly motivated to make the company more successful.

Legal Proceedings

On April 23, 2002, Overture Services (now owned by Yahoo) sued us in U.S. District Court for the Northern
District of California, claiming that the Google AdWords program infringes certain claims of an Overture Services patent. It also claims that the patent relates to Overture Services own bid-for-ad placement business model and its
pay-for-performance technologies. Overture is seeking unspecified damages, a multiplier for alleged willful infringement and an injunction. We have asserted defenses including defenses of non-infringement, invalidity of the patent in question and
unenforceability of the patent on grounds of inequitable conduct before the Patent and Trademark Office, and we will continue to vigorously defend the lawsuit litigating this case. If Overture Services wins, it may significantly limit our ability to
use the AdWords program, and we also may be required to pay damages.

Companies have also filed trademark infringement and related claims against us over the display of ads in response to user queries that include trademark terms. The outcomes of these lawsuits have differed from
jurisdiction to jurisdiction. A court in France has held us liable for allowing advertisers to select certain trademarked terms as keywords. We have appealed this decision. We were also sued in Germany on a similar matter where a court held that we
are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating similar issues in other cases in the U.S., France and Germany.

From time to time, we may also become a party to other litigation and subject to claims incident to the ordinary course
of business. For example, because our products and services link to or host material in which others allege to own copyrights, from time to time third parties have asserted copyright infringement or related claims against us. Although the results of
litigation and claims cannot be predicted with certainty, we believe that the final outcome of the matters discussed above will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on
us because of defense costs, diversion of management resources and other factors.

Our executive officers and directors, and their ages and
positions are as follows:

Name

Age

Position

Eric Schmidt

48

Chairman of the Executive Committee, Chief Executive Officer and Director

Sergey Brin

30

President of Technology, Assistant Secretary and Director

Larry Page

31

President of Products, Assistant Secretary and Director

Omid Kordestani

40

Senior Vice President of Worldwide Sales and Field Operations

Wayne Rosing

57

Vice President of Engineering

David C. Drummond

41

Vice President of Corporate Development, Secretary and General Counsel

George Reyes

49

Vice President and Chief Financial Officer

Jonathan J. Rosenberg

42

Vice President of Product Management

Shona L. Brown

38

Vice President of Business Operations

L. John Doerr

52

Director

John L. Hennessy

50

Director

Arthur D. Levinson

54

Director

Michael Moritz

49

Director

Paul S. Otellini

53

Director

K. Ram Shriram

47

Director

Eric
Schmidt has served as our Chief Executive Officer since July 2001 and served as Chairman of our board of directors from March 2001 to April 2004. In April 2004, Eric was named Chairman of the Executive Committee of our board of directors. Prior
to joining us, from April 1997 to November 2001, Eric served as Chairman of the board of Novell, a computer networking company, and, from April 1997 to July 2001, as the Chief Executive Officer of Novell. From 1983 until March 1997, Eric held
various positions at Sun Microsystems, a supplier of network computing solutions, including Chief Technology Officer from February 1994 to March 1997 and President of Sun Technology Enterprises from February 1991 until February 1994. Eric is also a
director of Siebel Systems. Eric has a Bachelor of Science degree in electrical engineering from Princeton University, and a Masters degree and Ph.D. in computer science from the University of California at Berkeley.

Sergey Brin, one of our founders, has served as a member of our
board of directors since our inception in September 1998 and as our President of Technology since July 2001. From September 1998 to July 2001, Sergey served as our President. Sergey holds a Masters degree in computer science from Stanford
University, a Bachelor of Science degree with high honors in mathematics and computer science from the University of Maryland at College Park and is currently on leave from the Ph.D. program in computer science at Stanford University.

Larry Page, one of our founders, has served as a member of
our board of directors since our inception in September 1998 and as our President of Products since July 2001. From September 1998 to July 2001, Larry served as our Chief Executive Officer and from September 1998 to July 2002 as our Chief Financial
Officer. Larry holds a Masters degree in computer science from Stanford University, a Bachelor of Science degree with high honors in engineering, with a concentration in computer engineering, from the University of Michigan and is currently on leave
from the Ph.D. program in computer science at Stanford University.

Omid Kordestani has served as our Senior Vice President of Worldwide Sales and Field Operations
since May 1999. Prior to joining us, from 1995 to 1999, Omid served as Vice President of Business Development at Netscape, an Internet software and services company. Omid holds a Masters of Business Administration degree from Stanford University and
a Bachelor of Science degree in electrical engineering from San Jose State University.

Wayne Rosing has served as our Vice President of Engineering since November 2000. From November 1996 to April 2000, Wayne served as Chief Technology Officer and Vice President of Engineering at Caere
Corporation, an optical character recognition software company. From 1985 to 1994, Wayne served in various executive engineering positions at Sun Microsystems. From 1992 to 1994, Wayne headed the team that developed the technology base for Java as
the president of FirstPerson, and, from 1990 through 1991, was President of Sun Microsystems Laboratories, both subsidiaries of Sun Microsystems. From 1985 to 1990, Wayne was a Vice President of Engineering at Sun Microsystems and, from 1980 to
1985, he was director of engineering for the Apple Computer Lisa and Apple II divisions. Prior to 1980, he held management positions at Digital Equipment Corporation and Data General.

David C. Drummond has served as our Vice President of Corporate Development, Secretary and General Counsel since
February 2002. Prior to joining us, from July 1999 to February 2002, David served as Chief Financial Officer of SmartForce, an educational software applications company. Prior to that, David was a partner at the law firm of Wilson Sonsini Goodrich
& Rosati, our outside counsel. David holds a J.D. from Stanford University and a Bachelor of Arts degree in history from Santa Clara University.

George Reyes has served as our Chief Financial Officer since July 2002. Prior to joining us, George served as Interim Chief Financial Officer for
ONI Systems, a provider of optical networking equipment, from February 2002 until June 2002. From April 1999 to September 2001, George served as Vice President, Treasurer of Sun Microsystems, a supplier of networking computing solutions, and as
Vice President, Corporate Controller of Sun Microsystems from April 1994 to April 1999. George is also a director of BEA Systems, an application infrastructure software company, and Symantec, an information security company. George holds a Masters
of Business Administration degree from Santa Clara University and a Bachelor of Arts degree in accounting from the University of South Florida.

Jonathan J. Rosenberg has served as our Vice President of Product Management since February 2002. Prior to joining us, from October 2001 to
February 2002, Jonathan served as Vice President of Software of palmOne, a provider of handheld computer and communications solutions. From November 2000 until October 2001, Jonathan was not formally employed. From March 1996 to November 2000,
Jonathan held various executive positions at Excite@Home, an Internet media company, most recently as its Senior Vice President of Online Products and Services. Jonathan holds a Masters of Business Administration degree from the University of
Chicago and a Bachelor of Arts degree with honors in economics from Claremont McKenna College.

Shona L. Brown has served as our Vice President of Business Operations since September 2003. Prior to joining us, from October 1995 to August 2003,
Shona was at McKinsey & Company, a management consulting firm where she had been a partner since December 2000. Shona holds a Ph.D. and Post-Doctorate in industrial engineering and engineering management from Stanford University, a Masters of
Arts degree from Oxford University (as a Rhodes Scholar), and a Bachelor of Science degree in computer systems engineering from Carleton University.

L. John Doerr has served as a member of our board of directors since May 1999. John has been a General Partner of Kleiner Perkins Caufield &
Byers, a venture capital firm, since August 1980. John is also a director of Amazon.com, an Internet retail company, drugstore.com, an Internet retail company, Homestore.com, a provider of real estate media and technology solutions, Intuit, a
provider of business and financial management software, palmOne, a provider of handheld computer and communications solutions, and Sun Microsystems, a supplier of networking computing solutions. John holds a Masters of Business Administration degree
from Harvard Business School and a Masters of Science degree in electrical engineering and computer science and a Bachelor of Science degree in electrical engineering from Rice University.

John L. Hennessy has served as a member of our board of directors since April 2004. Since
September 2000, John has served as the President of Stanford University. From 1994 to August 2000, John held various positions at Stanford, including Dean of the Stanford University School of Engineering and Chair of the Stanford University
Department of Computer Science. John has been a member of the board of directors of Cisco Systems, a networking equipment company, since January 2002 and chairman of the board of directors of Atheros Communications, a wireless semiconductor company
since May 1998. John holds a Masters degree and Doctoral degree in computer science from the State University of New York, Stony Brook and a Bachelor of Science degree in electrical engineering from Villanova University.

Arthur D. Levinson has served as a member of our board of directors
since April 2004. Since 1995, Art has served as a member of the board of directors of Genentech, a biotechnology company, and has served as its Chairman and Chief Executive Officer since September 1999. Prior to 1999 Art held various executive
positions at Genentech, including Senior Vice President of R&D. Art has been a member of the board of directors of Apple Computer, a computer hardware and software company, since 2000. Art was a Postdoctoral Fellow in the Department of
Microbiology at the University of California, San Francisco. Art holds a Ph.D. in biochemistry from Princeton University and a Bachelor of Science degree in molecular biology from the University of Washington.

Michael Moritz has served as a member of our board of directors
since May 1999. Michael has been a General Partner of Sequoia Capital, a venture capital firm, since 1986. Michael has served as a member of the board of directors of Saba Software, a provider of human capital development and management solutions,
since August 1998 and as a member of the board of directors of Flextronics International, a contract electronics manufacturer, since July 1993. Michael has also served as a member of the board of directors of RedEnvelope, an online retailer of
upscale gifts, since July 1999 and as its Chairman of the Board since April 2003. Michael holds a Masters of Arts degree from Christ Church, University of Oxford.

Paul S. Otellini has served as a member of our board of directors since April 2004. Paul has been a member of the
board of directors of Intel, a semiconductor manufacturing company, and has served as its President and Chief Operating Officer since 2002. From 1974 to 2002, Paul held various positions at Intel, including Executive Vice President and General
Manager of Intel Architecture Group and Executive Vice President and General Manager of Sales and Marketing Group. Paul holds a Masters degree from the University of California at Berkeley and a Bachelors degree in economics from the
University of San Francisco.

K. Ram Shriram
has served as a member of our board of directors since September 1998. Since January 2000, Ram has served as managing partner of Sherpalo, an angel venture investment company. Prior to that, from August 1998 to September 1999, Ram served as Vice
President of Business Development at Amazon.com, an Internet retail company. Prior to that, Ram served as President at Junglee, a provider of database technology, acquired by Amazon.com in 1998. Ram was an early member of the Netscape executive
team. Ram holds a Bachelor of Science degree from the University of Madras, India.

Board of Directors

Our bylaws provide
that the authorized size of our board of directors, which is currently nine (9) members, is to be determined from time to time by resolution of the board of directors. Our current directors were elected in the manner described in our certificate of
incorporation. The holders of a majority of our preferred stock, voting as a single class, elected L. John Doerr and Michael Moritz to the board of directors, and the holders of a majority of our common stock, voting as a single class, elected
Sergey Brin, Larry Page and K. Ram Shriram to the board of directors. John Hennessy, Arthur Levinson and Paul Otellini were appointed by the board of directors to fill vacancies created by the increase in the size of the board of directors. The
remaining director, Eric Schmidt, was elected pursuant to a voting agreement that we entered into with certain holders of our common stock and holders of our preferred stock, which provides for the election of a joint director nominated by a
majority of the preferred stock and by a majority of the common stock held by Sergey and Larry. Upon the closing of this offering, these board representation rights will terminate and none of our stockholders will have any special rights regarding
the election or designation of board members.

Our board of directors has established four committees: an audit committee, a leadership development and compensation
committee, a corporate governance and nominating committee and an executive committee.

Audit Committee

Our
audit committees main function will be to oversee our accounting and financial reporting processes, internal systems of control, independent auditor relationships and the audits of our financial statements. This committees
responsibilities will include the following:



Selecting and hiring our independent auditors.



Evaluating the qualifications, independence and performance of our independent auditors.



Approving the audit and non-audit services to be performed by our independent auditors.

Overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting
matters.



Reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations.



Preparing the report that the SEC requires in our annual proxy statement.

Our audit committee is comprised of Ram, Paul and Michael, each of whom is a non-employee member of our board of directors. Paul will be our audit
committee financial expert as currently defined under SEC rules. Ram will be the chairman of our audit committee. Our board of directors has determined that each of the directors serving on our audit committee is independent within the meaning of
the rules of the SEC and the listing standards of the New York Stock Exchange and the Nasdaq National Market. We intend to comply with future audit committee requirements as they become applicable to us.

Leadership Development and Compensation Committee

Our leadership development and compensation committees purpose will be
to assist our board of directors in determining the development plans and compensation of our senior management, directors and employees and recommend these plans to our board. This committees responsibilities will include:

Our Leadership Development and Compensation Committee consists of John Doerr and Art, each of whom is
a non-employee member of our board of directors. Our Leadership Development and Compensation Committee does not have a chairman. Each member of our Leadership Development and Compensation Committee will be an outside director as that
term is defined in 162(m) of the Internal Revenue Code of 1986, as amended, and a non-employee director within the meaning of Rule 16b-3 of the rules under the Exchange Act of 1934, as amended. Our board of directors has determined that
each of the directors serving on our Leadership Development and Compensation Committee is independent within the listing standards of the New York Stock Exchange and the Nasdaq National Market.

Corporate Governance and Nominating Committee

Our corporate governance and nominating committees purpose will be to
assist our board by identifying individuals qualified to become members of our board of directors consistent with criteria set by our board and to develop our corporate governance principles. This committees responsibilities will include:



Evaluating the composition, size and governance of our board of directors and its committees and make recommendations regarding future planning and the appointment of directors to
our committees.



Establishing a policy for considering stockholder nominees for election to our board of directors.



Recommending ways to enhance communications and relations with our stockholders.



Evaluating and recommending candidates for election to our board of directors.

Our Corporate Governance and Nominating Committee consists of John Doerr and John Hennessy, each of whom is a
non-employee member of our board of directors. Our board of directors has determined that each of the directors serving on our Corporate Governance and Nominating Committee is independent within the existing standards of the New York Stock Exchange
and the Nasdaq National Market.

Executive Committee

The Executive Committee will serve as an administrative
committee of the board that is available to facilitate the approval of certain corporate actions that do not require consideration by the full board.

Chairman of the Board

Our current charter documents provide that the chairman of our board of directors may not be an employee or officer of our company, and may not have been
an employee or officer for the last three years, unless the appointment is approved by two-thirds of the members of our board of directors. We currently do not have a chairman of our board of directors.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is an officer or
employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of
directors or compensation committee.

We do not currently compensate our directors in cash for their service as members of our board of directors. We do reimburse our directors for reasonable
expenses in connection with attendance at board and committee meetings. Additionally, our directors are eligible to receive and have received stock options under our stock plans.

In April 2004, our newly elected directors, John, Art and Paul each received an option to purchase 65,000 shares of
common stock subject to vesting over a term of five years and otherwise pursuant to the terms of our 2000 Stock Plan and 2003 Stock Plan (No. 2).

Executive Compensation

The following table sets forth information regarding the compensation that we paid to our Chief Executive Officer and each of our four other most highly
compensated executive officers during the year ended December 31, 2003. We refer to these officers in this prospectus as the named executive officers.

Summary Compensation Table

Annual Compensation

Long TermCompensationAwards

All OtherCompensation

Name and Principal Position

Salary

Bonus(1)(2)

SecuritiesUnderlyingOptions

Eric Schmidt, Chief Executive Officer and Director

$

250,000

$

301,556



$

2,894

(3)

Sergey Brin, President of Technology and Director

150,000

206,556



14,440

(4)

Larry Page, President of Products and Director

150,000

206,556



11,327

(5)

Omid Kordestani, Senior Vice President of Worldwide Sales and Field Operations

175,000

394,456

(6)



2,704

(7)

Wayne Rosing, Vice President of Engineering

175,000

151,314



2,704

(8)

(1)

We generally pay bonuses in the year following the year in which they were earned. Unless otherwise noted, bonus amounts presented represent employee performance bonuses and are
reported for the year in which they were earned, though they may have been paid in the following year.

(2)

Each of the bonuses presented include a holiday bonus in the amount of $1,556.

(3)

Includes $2,200 contributed to Erics account under our 401(k) plan and $694 of insurance premiums paid for his benefit.

(4)

Includes $14,008 of engineering patent awards and $432 of insurance premiums paid for Sergeys benefit.

(5)

Includes $10,895 of engineering patent awards and $432 of insurance premiums paid for Larrys benefit.

(6)

Includes $347,900 of sales commissions.

(7)

Includes $2,200 contributed to Omids account under our 401(k) plan and $504 of insurance premiums paid for his benefit.

(8)

Includes $2,200 contributed to Waynes account under our 401(k) plan and $504 of insurance premiums paid for his benefit.